AMC Theatres Says There Is “Substantial Doubt” the Chain Can Remain in Business Amid COVID-19

The largest theater chain in both the U.S. and the world, AMC Theatres, gave a grave-sounding warning to investors on Wednesday, revealing its first-quarter financials, which show the impact of the COVID-19-related closures that began in March and have largely continued until today. Overall, AMC stated that its revenue in the first quarter fell about 22% to $941.5 million, from more than $1.2 billion last year. Keep in mind, that’s with closures that only began in March. Overall, the company (controlled by Chinese conglomerate Dalian Wanda Group) posted a loss that could be up to $2.4 billion.

“If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations,” said AMC in its presentation. “Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.”

To not exist as a “going concern” would mean the company would be filing for bankruptcy or simply dissolving, although this seems to represent a worst-case scenario that is still fairly unlikely. AMC had previously sought out new, short-term lines of credit thta the company said would be enough to keep their operation largely suspended through November. Most theaters, meanwhile, seem to be hoping for July reopenings, as long as distributors are willing to release their films in that month in the hopes that audiences will return.

AMC said the following, further addressing its finances:

“We continue to manage proactively our cash resources to control our monthly cash spend rate. At the same time, we have begun to ramp up our cash spend with the intention of reopening theaters this summer,” it said. “We believe we have the cash resources to reopen our theaters and resume our operations this summer or later. Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate revenues. We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our operations.”

As AMC Theatres locations around the globe closed in March, the company released or furloughed more than 26,000 employees. That extended all the way to its corporate office, where 600 corporate employees were furloughed, including CEO Adam Aron. This is, of course, only slapping a Band-Aid on the wound, however, as AMC’s revenues will remain nonexistent until such time as the chain is able to reopen and exhibit films more or less as normal. Just knowing that we might exist in a world without AMC as the world’s largest theater chain is a very strange thought indeed.