Shares of AMC Entertainment (NYSE: AMC) continued to tumble Wednesday after the company’s chief executive officer said it was not currently weighing bankruptcy and is focused on fundraising.
CEO Adam Aaron Bloomberg news late Tuesday that the company is “going to throw” all of its efforts “into raising additional capital, primarily equity.”
He added, “We’d like to succeed in this effort. If we don’t, obviously we’ll have to consider other options down the road. But that time has not yet arrived, and any reports to the contrary are wholly inaccurate.”
The news followed a previous report by Bloomberg earlier on Tuesday, which cited people familiar with the matter, that AMC was mulling a range of options including bankruptcy. The news outlet also noted that lenders to AMC have held preliminary discussions in regards to providing the firm with financing if it chooses to file for Chapter 11 court protection.
“I really don’t know how they don’t go bankrupt,” one Wall Street analyst said, as cited by Deadline Hollywood.
Further, “They should be out of cash by the end of January. And most companies don’t file when they are minus ten million in cash. The attorneys have to be paid.”
But even before those two reports, investors were bearish enough on the stock as is after the world’s largest movie chain disclosed in a filing with Securities and Exchange Commission that if its attendance does not improve, it could run out of cash by the end of 2020 or early next year. In comparison, its rival Cinemark Holdings (NYSE: CNK) has roughly 17 months of liquidity left. Should AMC go bankrupt, a reorganization post-bankruptcy could wipe out a shareholder's posiiton entirely.
By midday, Wednesday, the stock in AMC tanked 16% to $2.98 per share. It also hit a 26 week low today of $2.66 per share. Since Monday’s close, AMC’s shares have plummeted 27% to date.
While 85% of its U.S. theaters are opened, the cinema chain’s attendance is down 85% year-over-year. With $5 billion in debt and burning around $115 million per month, AMC will look to raise capital by way of a share sale and/or bond issuances.
That said, the world’s largest movie chain is in a world of trouble.