People walk outside the newly boarded AMC 34th Street 14 cinema as the city continues with phase 4 of its reopening following restrictions imposed to slow the spread of the coronavirus on September 4, 2020 in New York City.
Noam Galai | Getty Images
Movie theater chain AMC hopes to raise $ 125 million in new capital to avoid bankruptcy by selling 50 million shares in a new financing round, the company said Wednesday.
The largest movie theater chain in the world raised $ 104 million earlier this month after selling approximately 38 million of 200 million available shares. The company is seeking to strengthen its balance sheet to cope with the protracted economic downturn as the coronavirus pandemic enters a second year and threatens the viability of the film industry.
Earlier this month, AMC received a $ 100 million investment from Mudrick Capital Management, but the low-budget movie theater chain still needed at least $ 750 million in additional liquidity to fund through 2021.
The company has reiterated in several SEC filings that bankruptcy is a possibility if it cannot raise more money.
We intend to use the net proceeds from the sale of the Class A common stock offered in this prospectus for general corporate purposes, including the repayment, refinancing, redemption or repurchase of existing debt or equity capital, working capital, capital expenditures and other investments, ” AMC said in Wednesday’s filing.
While the Covid-19 crisis has ravaged theaters since March, perhaps no chain has hit harder than AMC. The company faced the pandemic with nearly $ 5 billion in debt, which it had amassed by equipping its theaters with luxury seating and buying competitors such as Carmike and Odeon.
AMC has been focusing on fundraising for months. It has already renegotiated its debt to improve its balance sheet this year and is exploring several options for additional liquidity. It is also trying to find ways to increase visitor numbers even as the outbreak in the US worsens
Shares of the company closed by 5.7% on Wednesday and are down 70% since January.