The largest theater chain in the United States may be in big financial trouble.
According to an "S&P Global" report, AMC Entertainment’s credit rating has been downgraded froma ‘B’ to a catastrophic ‘CCC-’, which means, “Default imminent, with little prospect of recovery." That means its 600 chains all around the country are in danger of being shut down for good. Supposedly, even before the COVID-19 pandemic happened, AMC was already playing with fire and on the brink of bankruptcy.
"We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer. While unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and if we expected the company would be able to generate substantial cash flow in 2021. This would likely require conclusive knowledge about the length of the theater closures and a view that the box office would return to normalized levels in 2021."
The impending, maybe even inevitable, closure of AMC theaters all around the country would be a devastating blow to the theatrical experience in the United States. At this present time, it is inevitable for AMC to demand some kind of bailout. According to Subscription Inside, AMC reported a $5 billion-plus deficit in 2019 and losses of $149 million for the year. Yikes.
Of course, there is a solution to this immediate problem. Maybe, just maybe, we could go back to some kind of normalcy before it’s too late for AMC. That’s the glass-half-full option for them. The more realistic probability would be that its competition, Regal cinemas, could purchase AMC theaters and just convert them to their own. With the 2020 summer movie season on the brink of extinction, the losses for theater chains worldwide would be immeasurable. Only Christopher Nolan’s “Tenet” and Pixar's “Soul” have kept their summer movie release dates intact, although I’m hearing that could change for both of these movies by the end of this week.