AMC Entertainment has admitted it could go bust if its 1,000 cinemas are forced to remain closed due to COVID-19.
In an SEC filing today (Wednesday), the US’s largest exhibition chain said it has “substantial doubts” as to its viability as it has been operating with no revenue since all its theatres closed in March, when it furloughed 600 corporate employees.
“We cannot predict when or if our business will return to normal levels,” the firm said in the public filing, adding that it was concerned it may not have sufficient liquidity to last until its cash-generating operations are back to normal.
AMC said it has enough liquidity to see it through to the end of July, but underscored concerns that even once cinemas reopen it may not have enough content to show and people will be slow to return due to continued health fears.
It added: “We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain.”
The company said it expects its first-quarter net loss to range from $2.1bn to $2.4bn, which is largely attributable to a $2bn impairment charge related to the coronavirus shutdown.
It also reported net losses increased to $224.5m, up from $101.8m in the prior-year period, while revenue fell to $941.5m, down from $1.2bn in the same quarter in 2019.
Meanwhile, new research from Wall Street analyst firm MoffettNathanson has predicted that revenues from cinema ticket sales in the US will be halved this year, falling from $11.4bn in 2019 to $5.5bn in 2020.
It said, according to Variety, the decrease could be much higher if cinemas do not reopen in July and summer blockbusters such as Tenet and Mulan get pushed back.
However, the research also noted box offices would see a “significant bounce back” in 2021 to $9.7bn due to what it claims is a “stronger release slate.”
Image: Elliott Brown