Could we be witnessing the beginning of the end for the world's largest movie theater chain operator? Perhaps so. Apparently, creditors of the beleaguered and debt-ridden AMC Entertainment Holdings (AMC) have hired lawyers that specialize in debt restructuring projects.
According to a report in The Wall Street Journal, citing "people familiar with the matter," the lenders have retained the services of veteran interational law firm Gibson, Dunn, & Crutcher to advise them on expected talks about restructuring.
AMC's business has been almost entirely hobbled by the SARS-CoV-2 coronavirus pandemic. Complying with mandatory and voluntary stay-at-home measures enacted around the world, the company has temporarily closed all of its cinemas and furloughed its employees -- including its CEO, Adam Aron. With the coronavirus still continuing to spread, it's doubtful any of the movie theaters will open their doors anytime soon.
An aggressive acquisition policy that brought chains such as Carmike Cinemas and Nordic Cinema Group into its portfolio built AMC into the leader it is today. But these expensive assets saddled the company with a high pile of debt, amounting to roughly $4.9 billion, much of which is trading at a steep discount, according to the Journal. As of the company's latest reported figures, it has only around $276 million in cash on hand.
AMC has not yet commented on the Journal's story.
AMC's shares on Wednesday fell 17%, more sharply than many top stocks and market indexes.