AMC Theaters is struggling because of the COVID-19 pandemic. They’ve been hit on three different monetary fronts: ticket sales, food options, and exclusive movie access.
With reduced capacity seating required in most markets, the movie theater chain’s per-screen revenues are down significantly. When fewer customers walk through the door, that means less popcorn gets sold.
The movie studios have also negotiated a significantly lower exclusive run time for new films, hoping to take advantage of the new at-home market.
In an effort to counter these challenges, AMC hopes to sell up to 20 million Class A shares to bring in $50 million in new capital. This news comes on the heels of an October 2020 announcement that stated the organization was on its way toward Chapter 11 bankruptcy.
Why Is AMC Struggling During This Time?
AMC found itself handling a lot of debt at a time when it wasn’t needed earlier in 2020. The organization had purchased competitors like Odeon and Carmike, creating a $4.75 billion obligation.
The movie theater chain has been in survival mode for quite some time. It has already looked for ways to boost liquidity while improving its overall balance sheet.
AMC wants to hold on until new content can arrive in theaters. Three titles are expected to potentially tempt customers to come to the big screen again, including “Wonder Woman 1984.”
Those hopes might get dashed with the recent announcement that Wonder Woman will simultaneously premiere on HBO Max.
In the previous quarter, AMC earned approximately $119.5 million in revenues. For the same period in 2019, the theater chain had gained $1.32 billion.
The maximum offering price for each share is $2.39, which would raise a total of $47.7 million if the fundraising offer is successful.