Just a day after its stock bounded over 20% higher on the reopening plans of its New York State theaters, AMC Entertainment (AMC 6.37%) is using the opportunity of the rising stock price to issue more shares.

The theater operator says it is facing a cash crunch that could force it to seek court-approved reorganization of its debts if it can't generate sufficient liquidity soon. AMC reiterated it is going to run out of money by the end of the year or early next year, so it announced today that it is launching a stock offering of up to 15 million shares, which amounts to approximately 14% of its shares outstanding.

Social distancing signs in theaters

Image source: Getty Images.

The coronavirus pandemic wrecked the theater chain's finances. It had $5.5 billion in debt at the end of September, following a financial restructuring agreed to by its lenders back in July. Yet even with 80% of its theaters reopened, moviegoers have been reticent about returning. And even where it has attracted people, AMC is constrained by capacity limits of 30% to 50% of normal.

The situation is being exacerbated by movie studios abandoning plans to launch films in 2020, opting instead to push back their debut until next year. That caused Regal theater owner Cineworld Group (CNNW.F) to close down all its theaters again. AMC and Cinemark Holdings (CNK 0.73%) are trying to eke out an existence by keeping their theaters open and subsisting on reruns.

In a filing with the Securities and Exchange Commission today, AMC said, "Substantial doubt exists about the company's ability to continue as a going concern for a reasonable period of time."

AMC has been dancing around bankruptcy for some time, and though New York's decision to allow theaters to reopen was welcome news for the theater operator, the reprieve may not have come soon enough.