Please ensure Javascript is enabled for purposes of website accessibility

AMC Tells Its Landlords: We're Not Paying Rent Anymore

By Rich Smith - Apr 8, 2020 at 1:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

No tickets, no revenue. No revenue, no rent.

It's been three weeks now since cinema chain AMC Entertainment (AMC 5.26%) (and its rivals Regal and Cinemark, too) closed all their theaters in response to government recommendations against gatherings of more than 10 people in light of the COVID-19 pandemic.

It's been one week since AMC said it hopes it will be able to reopen for business by mid-June -- but began retaining bankruptcy lawyers in case it can't. Now comes the latest installment in this saga of a movie theater chain in crisis: AMC will stop paying its rent.

Darkened empty movie theater with floor littered with popcorn.

Image source: Getty Images.

AMC broke the bad news to its landlords in a letter dated March 27, and reported by movie industry journal Deadline last night. As the letter explains, "AMC temporarily suspended operation of all of its theatres in the United States ... on March 17, 2020 in response to circumstances beyond AMC's control and specifically the COVID-19 pandemic ... and in compliance with various federal, state and local government mandates."  

While necessary to stop the spread of the coronavirus, the move left AMC without any incoming revenue.

"Without revenue from its theatres," the letter continues, "AMC will cease paying rent and charges under the lease effective as of April 1, 2020." 

That's hard news for the landlords, no doubt, but AMC attempted to soften the blow by reassuring that it "intends to reopen its theatres as soon as possible after it is safe to do so," and "looks forward to getting back to business as usual," which would presumably include paying its rent. In the meantime, AMC tells its landlords it "intends to advocate at the federal level for appropriate relief for the theatre ... and real estate industries."

The clear implication: We're all in this together.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
$24.92 (5.26%) $1.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.