Tue 10/13/2020 13:48 PM
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AMC Entertainment is considering a potential chapter 11 filing as its liquidity needs grow amid an ongoing cash burn driven by declines in attendance during the Covid-19 pandemic, according to sources. AMC said today that it expects its “existing cash resources would be largely depleted by the end of 2020 or early 2021” absent “significant increases in attendance from current levels or incremental sources of liquidity” given the reduced movie slate for the fourth quarter, and that thereafter it will require “material” additional sources of liquidity.

As of June 30, AMC borrowed all available amounts under its $225 million revolver due 2024 and £100 million Odeon revolver due 2022. The company reported $507.9 million of cash as of Aug. 31. It said that cash burn averaged about $115.2 million a month for July and August and that it expects cash burn for the remainder of the third quarter to be roughly comparable with those levels.

The company is working with Weil Gotshal as legal advisor, the sources said. AMC is working with Moelis as financial advisor, as reported.

The ad hoc group of lenders to AMC’s $1.985 billion L+300 bps term loan due 2026, organized with Gibson Dunn, is contemplating potential debtor-in-possession financing, the sources added. The group is working with Greenhill as financial advisor, they said.

The term loan was quoted today at 62.5/64, according to a trading desk.

AMC said today that it continues to explore potential sources of additional liquidity, including additional debt and equity financing, further renegotiations with landlords regarding lease payments, potential asset sales, joint venture or other arrangements with existing business partners, and minority equity investments.

Following the company’s subordinated notes exchange in July, AMC has limited options to raise additional liquidity, with the $600 million first lien convertible notes due 2026 issued as part of the transaction likely permitting the company to incur only $100 million of first lien debt, according to Covenants by Reorg.

AMC said that as of Oct. 9, it had resumed operations at 494 of its 598 U.S. theaters, with limited seating capacities of between 20% and 40%, representing about 83% of the U.S. theaters and 77% of its 2019 U.S. same-theater revenue. Since the resumption of operations in its U.S. markets, the company has served more than 2.2 million guests as of Oct. 9, representing a same-theater attendance decline of about 85% year over year.

AMC Entertainment, Weil Gotshal and Gibson Dunn did not respond to requests for comment. A representative for Greenhill declined to comment.

--Harvard Zhang
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