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AMC Theatres warns of up to $2.4 billion loss, flags 'going concern' doubts

Anousha Sakoui, Los Angeles Times on

Published in Business News

It would reduce its total debt by up to 11% to $4.69 billion, the company said in a regulatory filing.

"It's actually a really brilliant plan, and the open question is: Do the existing bondholders take it," said Michael Pachter, research analyst at Wedbush Securities.

AMC, however, added that if operations didn't restart within its estimated timeline, or if another coronavirus outbreak were to cause a new shutdown, it might need more financing to stay afloat.

A few states have already given the go-ahead to theaters to reopen, and some studios are planning for major movie releases as soon as July.

Some analysts question, however, whether theaters can effectively sanitize their locations or test asymptomatic customers. There's also uncertainty over what will happen if an outbreak is traced back to a screening.

"The theater chains are being unrealistically Pollyannaish about this," Pachter said.

 

Some analysts have predicted that the if the outbreak is extended and prolongs a cash crunch, it could force heavily indebted AMC to file for Chapter 11 bankruptcy protection from creditors. AMC has already laid off or furloughed thousands of workers, including 600 corporate staffers, including Chief Executive Adam Aron.

Its rivals also are struggling. Cinemark released first-quarter earnings Wednesday that showed the heavy financial toll of the virus. The company posted a net loss of $59.6 million for the period ending March 31.

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