AMC Theaters Unlikely to Survive the Movie Theater Shut Down

We all know that movie theaters have been hurting since they were forced to close down over the coronavirus pandemic. There was also a fear that some movie theaters might not be able to make it out of this alive. It looks like one of the big movie theater chains is sweating it, and according to The Wrap, they are unlikely to survive.

It’s reported that AMC Entertainment's credit rating has been downgraded from a 'B' to 'CCC-,' and what that means is that "Default imminent, with little prospect for recovery." Analyst S&P Global confirms:

"We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer." 

AMC is in major debut as it reported a $5+ billion deficit at the end of 2019 and losses of $149 million. The analysts continued:

"While unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and if we expected the company would be able to generate substantial cash flow in 2021. This would likely require conclusive knowledge about the length of the theater closures and a view that the box office would return to normalized levels in 2021."

So, it’s not looking good for AMC Theaters. This is actually pretty crazy. It’s would be sad to see a theater chain like AMC go out of business. I’ve been watching movies at their theaters since I was a teenager! It’s strange to think that AMC Theaters might not recover from this. If AMC is facing these kinds of problems, I’m sure that there are other theater chains facing this kind of fate as well.