Cinema chain AMC Entertainment Holdings is looking to raise more fresh cash, in part for debt refinancings and repayments amid the coronavirus pandemic.
The move comes as the exhibition giant looks to continue reopening its U.S. theater circuit and survive the pandemic after a debt restructuring. On Thursday, AMC unveiled an equity distribution agreement with Citigroup Global Markets and Goldman Sachs to sell up to 15 million class A shares “from time to time” and “at-the-market” prices, the company said in an SEC filing.
The capital raise, essentially a private placement of stock, will see the proceeds used “for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness or working capital, capital expenditures and other investments,” cash-strapped AMC said.
And the company warned prevailing market conditions impacted by the COVID-19 crisis may require additional cash raises into next year.
“We currently estimate that unless theatre attendance levels improve significantly from the third quarter of 2020 to the fourth quarter of 2020 and again into 2021 and we achieve levels of attendance approaching approximately three-quarters of normalized levels, we will continue to require additional sources of liquidity to meet our obligations as they become due, and our required amounts of additional liquidity may be significant,” AMC said in the SEC filing.
In July, AMC completed a debt restructuring agreement with its bondholders that included $200 million in fresh cash and the Silver Lake Group purchasing $100 million in new senior notes.
The extent of the COVID-19 hit taken so far by the largest U.S. cinema chain was underlined by commentary in its latest SEC filing.
As of Sept. 14, the company said it had hosted 1.4 million guests since reopening its domestic circuit, “representing a same-theatre attendance decline of approximately 81 percent compared to the same period a year ago.”
AMC added the disruption to the domestic exhibition sector beyond seating capacity limits, included U.S. states like California, New York, Maryland, Michigan, North Carolina and Washington State remaining “substantially or completely closed for theatrical exhibition as of September 14, 2020. As a result, studios have postponed new film releases or moved them to the home video market, and movie release dates may continue to move in the future,” AMC reported.
The cinema chain said it raised $77 million by selling nine theaters in Europe’s Baltic region.
AMC reported it had $508 million in cash on its balance sheet as of Aug. 31, even as it faced an average cash burn of $115.2 million in July and August to keep its theater chain in operation.