AMC Entertainment Raises Fresh Cash, Staves Off Bankruptcy; “Today The Sun Is Shining For AMC” – CEO Adam Aron

Struggling AMC Entertainment said early Monday it has raised or signed commitments for $713 million in fresh financing, calling it “enough cash to “make it through this dark, coronavirus-impacted winter.”

The funds follow $204 million it raised in December, for a total of $917 million, which means, said CEO Adam Aron, “that any talk of an imminent bankruptcy for AMC is completely off the table.” It was striking news after months of uncertainty as to whether the nation’s largest cinema chain could continue as a going concern. Shares are up a whopping 38% at $4.85.

Aron told Deadline he believes “that with any kind of semblance of recovery, just, a partial recovery, we raised enough money to make it through all of 2021.” Worst case would be July — “assuming that everything is closed at we don’t sell one ticket in that timeframe.”

“With the world getting vaccinated now, we all understand that theaters are closed or empty in January, but that’s not where we are going to be in the summer hopefully, not where are next winter. But of course nobody knows,” he said.

This year exhibition will also be shaped in part by new deals with Hollywood and new windows. Asked how the shifts could impact AMC’s finances in 2020, Aron was upbeat on a pact with Universal inked early in the pandemic. He sounded less sanguine on WarnerMedia — which is releasing its entire 2021 slate concurrently on HBO Max and in theaters – but he didn’t get into it.

“AMC is very pleased with the agreement we reached in July with Universal that has been successful for Universal and for AMC. Both companies AMC and Universal took steps to reshape the industry, and so far so good. As for other relationships with other studios, we still have some work to do. But today is not a day to be worried about HBO Max. Today is the day to celebrate that we raised $917 million.”

The cinema chain said that in total it has raised $506 million of equity, from the issuance of 164.7 million new common shares since December. That includes previously announced securing of $100 million of additional first-lien debt and the concurrent issuance of 22 million new common shares to convert $100 million of second-lien debt into equity.

The rest of the fresh funds come from commitment letters for $411 million of incremental debt capital in place through mid-2023 unless repaid before then through the upsizing and refinancing of its European revolving credit facility through its Odeon business.

The company started fundraising early and has raised $1.9 billion since April. “And we are not done,” Aron said.

“Two words describe why we were was successful in raising this money – sheer will,” said Aron. “Many people have underestimated the resolve of the AMC management team to power through this pandemic crisis.”

“We were able to state the case that AMC that was the leader in this industry going into the pandemic … and that while we had a liquidity problem while our theaters were shut the movie industry was going to have a bright future again. We just needed to bridge this liquidity issue,” he said. “Both equity and debt investors do not believe that movie theaters are going to stay shut forever.”

AMC said it expects to continue to make progress in its ongoing dialogue with theatre landlords about the amounts and timing of owed theater lease payments.

“Today, the sun is shining on AMC,” said Aron.

Theaters shut in March as the virus took hold. They opened in parts of the country and overseas but were crippled by key markets like New York City and Los Angeles remaining dark, by reduced capacity, by big releases being postponed and, most recently, by a strong second wave of infections and lockdowns.

AMC had just over $300 million in cash at year end of the year, with a monthly average burn rate of $124 million. Of its 593 U.S. theaters, 438 are open. Some 86 of 360 locations overseas are open.

As with much of the economy, a lot depends on the vaccine.

“Looking ahead, for AMC to succeed over the medium term, we are going to need for much of the general public in the U.S. and abroad to be vaccinated. To that end, we are grateful to the world’s medical communities for their heroic efforts to thwart the COVID virus. Similarly, we welcome the commitment by the new Biden administration and of other governments domestically and internationally to a broad-based
vaccination program.”