Movie theater chain AMC is hoping to raise $125 million in fresh capital to stave off bankruptcy by selling 50 million shares in a new funding round, the company said Wednesday.
The largest cinema chain in the world raised $104 million earlier this month after selling roughly 38 million of 200 million in available shares. The company is trying to shore up its balance sheet to withstand the prolonged economic downturn as the coronavirus pandemic drags into a second year and threatens the viability of the movie industry.
Earlier this month, AMC received a $100 million investment from Mudrick Capital Management, but the cash-strapped cinema chain still needed at least $750 million of additional liquidity to fund cash requirements through 2021.
The company has reiterated in several SEC filings that bankruptcy is a possibility if it can’t raise more funds.
“We intend to use the net proceeds from the sale of the Class A common stock offered by this prospectus for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness or capital stock, working capital, capital expenditures and other investments,” AMC said in the Wednesday filing.
While the Covid-19 crisis has battered theaters since March, perhaps no chain has been hit harder than AMC. The company headed into the pandemic with nearly $5 billion in debt, which it had amassed by outfitting its theaters with luxury seating and from buying competitors such as Carmike and Odeon.
AMC has been focused on fundraising for months. It already renegotiated its debt to improve its balance sheet this year and is exploring several options for additional liquidity. It is also trying to figure out ways to increase attendance even as the outbreak worsens across the U.S.
Shares of the company closed down 5.7% on Wednesday and have slumped by 70% since January.
Source: Business - cnbc.com
