Despite AMC Entertainment Holdings (NYSE:AMC) opening over 80% of its movie theaters by mid-October, ratings agency S&P Global says the theater operator's financial condition is dire and it expects the chain to run out of money within six months.
That outlook could change if AMC is able to raise additional capital before then, but S&P doesn't see that as likely. It warned the risk of default is great as it lowered its rating on the theater operator to CCC- from CCC+.
Turning out the lights
AMC has danced around the brink of bankruptcy as it restructured its debt, but as the potential for any movie blockbusters to draw in crowds this year fades, S&P's outlook for the theater operator has darkened considerably. It wrote, "We believe a liquidity crisis is all but inevitable even if the company were to fully reopen all of its theaters."
The Christopher Nolan spy movie Tenet didn't draw nearly as many people in as was hoped, taking in just $3.4 million in its fourth week, and now more big-budget movies are being pushed out until 2021. The twice-delayed James Bond film No Time to Die was pushed back yet again till next year, leading Regal theater parent Cineworld to shut down all of its theaters in the U.S. and U.K.
It said "without these new releases, Cineworld cannot provide customers in both the U.S. and U.K. with the breadth of commercial films necessary for them to consider coming back to theaters against the backdrop of COVID-19."
Shares of AMC and Cinemark were falling in premarket trading today. The National Association of Theatre Owners, the Directors Guild of America, and the Motion Picture Association are all calling on Congress to bail out movie theater operators.