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AMC Thinks It Has Enough Cash to Survive Until July -- And Maybe Longer

By Rich Smith - Apr 17, 2020 at 11:31AM

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A $500 million loan could tide AMC over through Thanksgiving.

One month ago, AMC Entertainment (AMC -4.01%) -- and rival movie theater chains Cineworld and Regal, too, for that matter -- closed their doors amid the coronavirus pandemic. For the past 30 days, these companies have all been essentially revenue-less, and operating on the good graces of the government (from which they've requested a bailout), their landlords (to whom they're not paying rent), and their bankers (from whom they're taking out massive loans).

Will all of this be enough to keep the movie theaters from going under?

Thanksgiving Day meal with a roast turkey in the center

Image source: Getty Images.

AMC thinks so. That is, if business returns to normal by July.

In a filing with the SEC last night, AMC updated investors on risk factors affecting its business, and specifically, factors related to COVID-19, in connection with the company's seeking to issue $500 million in first lien notes due 2025 (i.e. borrow $500 million).  

First, the good news: AMC says that as of March 31, it had a cash balance of $299.8 million. This, AMC says, is "sufficient to withstand a global suspension of operations until a partial reopening in July."

Now here's the bad news: Little of this cash is actually AMC's. Rather, $215 million of AMC's cash balance was borrowed under a $225 million senior secured revolving credit facility due April 22, 2024. Another $111.46 million was borrowed in the form of British pounds sterling under a 100 million pound revolving credit facility due February 14, 2022.

Moreover, in total, AMC is carrying some $10.35 billion in debt. Now, AMC wants to add $500 million in additional debt, hoping such monies will give the company "sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving."  

The implication: If it doesn't get the money, AMC could go bankrupt in July.

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.

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