A week ago it was looking as though AMC Entertainment (NYSE:AMC) was inching closer to filing for bankruptcy protection as the coronavirus pandemic forced all movie theaters closed. Now, the theater operator has announced it plans to raise $500 million and should have no problem surviving well into the fall.
With owners hopeful there will be a July reopening, the threat of bankruptcy for AMC seems to have been pushed to the background.
Plenty of time to recover
AMC announced it is offering a private placement of new debt in the amount of $500 million, with a 10.5% annual interest rate, that will mature in 2025.
AMC operates about 1,000 theaters globally, including 630 theaters in the U.S., and employs some 25,000 workers. It was forced to close in order to contain the spread of COVID-19, the disease caused by the coronavirus. The closure led to reports that AMC was talking to a law firm about a bankruptcy filing.
Last week AMC's largest shareholder, Dalian Wanda Group, said the reports were "pure rumor." The theater operator carries nearly $4.9 billion in debt that was fueled by a growth-by-acquisition spurt that saw it buy up several rival theater operators. It had less than $300 million in cash at the end of March.
Dalian Wanda's statement spurred rumors that the investor might bail out AMC, but the new debt offering seems to put that to rest.
Reuters reports rival Cinemark (NYSE:CNK) is also seeking to raise $250 million in a debt offering to survive the pandemic.