AMC Theatres hopeful after cash infusion

The world's largest movie-theater company has managed to avoid bringing the curtain down on its business.

AMC Entertainment Holdings Inc, which operates the AMC Theatres chain in the US, announced Monday that since Dec 14, it has raised or signed commitment letters to receive $917 million of new equity and debt capital. The company says the funding will help it stave off bankruptcy in an economy depleted by the coronavirus and subsequent shutdowns.

In its statement, the company, which now has raised more than $1 billion from April through November, said it was optimistic business would rebound now that COVID-19 vaccines are being administered.

AMC had previously warned investors that bankruptcy was a possibility if the company failed to replenish its cash position by selling stock. It operates some 1,000 theaters and 11,000 screens worldwide.

The company, based in Leawood, Kansas, was acquired by China's Dalian Wanda Group in 2012 for $2.6 billion, at the time the largest acquisition by a Chinese private enterprise of an American company. Wanda holds about 60 percent of voting rights in AMC through ownership of all the company's super-voting Class B shares.

The Beijing-based conglomerate moved to upgrade the AMC theater experience with features such as reclining seats, improved food service and better sound systems and projection, such as IMAX and Dolby Cinema.

In the release announcing the new funding Monday. AMC CEO and President Adam Aron said, "the sun is shining on AMC".

AMC estimated that after the cash infusion, its "financial runway has been extended deep into 2021". AMC also is presuming that it will continue to make progress in its talks with theater landlords about the amounts and timing of lease payments owed.

"This means that any talk of an imminent bankruptcy for AMC is completely off the table," said Aron, known for his brash, disruptive approach to a vintage industry. AMC was founded in 1920.

"What separates successful leaders from unsuccessful leaders is boldness, and I have always tried to be the opposite of timid, to fundamentally change a company or an industry for the better," Aron told The New York Times in an interview published Friday.

Aron, 66, also is a co-owner of the NBA's Philadelphia 76ers and previously has run Norwegian Cruise Line and Vail Resorts.

As of Jan 21, 438 of AMC's 593 US theaters and 86 of its 360 international theaters were open, with extensive masking, distancing and cleaning measures in place. (Not included in the reopenings yet are theaters in the top two markets — New York City and Los Angeles.)

All AMC theaters were closed from March through June this year.

"Given the push to vaccinate the general population, an increase in cinema attendance seems likely, although AMC notes that no one knows for sure the future course of this and other strains of the coronavirus, and therefore thoughts as to future cash needs of AMC are uncertain. Investors are cautioned accordingly," the company said.

Investors seem undeterred for now, as they sent shares of AMC up 54 cents, or 12.2 percent to $4.94 in New York Stock Exchange trading on Tuesday. It was only on Jan 5 that the reeling theater chain saw its stock hit a 52-week low of $1.98.

"Looking ahead, for AMC to succeed over the medium term, we are going to need for much of the general public in the US and abroad to be vaccinated," Aron said.

Aron expressed similar sentiments in an interview with Variety.

"I think we will find out that the health statistics in the United States will be much improved if even a third of the population is vaccinated," he said. "I do think we're going to need to see substantial vaccination in the US, but not as much vaccination as has been brandished about publicly to see improvements in the US economy and consumer behavior overall."

While the pandemic dealt a near fatal blow, movie theaters in the US also have had to compete for several years with streaming services such as Netflix and Amazon Prime Video, and with the proliferation of increasingly larger, flat-screen smart TVs. And now for about a year, those services have benefited from what amount to captive audiences of at-home viewers.

Then there was the stark announcement by Warner Bros studios in December that it would release its entire 2021 movie slate simultaneously to theaters and on its HBO Max streaming service, a move vociferously opposed by Aron.

Still, it wasn't that long ago — in the pre-pandemic year of 2019 — that theaters worldwide took in a record $42.2 billion at the box office, according to the Motion Picture Association.

In the first nine months of 2020, AMC lost $3.6 billion.

But with people having been mostly cooped up for about a year, nostalgic trips to the theater could be what AMC needs to flourish again.