Despite a big box office weekend, things are looking grim over at AMC Entertainment. The company has been skirting bankruptcy for quite some time now, spurred on by a significant decline in theatergoers since 2020. The ongoing writers’ strike coupled with the recent actors’ strike looks to be adding additional pressure on AMC Entertainment’s financial undertakings. No new releases mean no revenue streams.
AMC is looking to raise capital by issuing new shares, much to the dismay of the company’s current investors.
“AMC must be in a position to raise equity capital. I repeat, to protect AMC’s shareholder value over the long term, we MUST be able to raise equity capital,” CEO Adam Aron posted on Twitter. “This is especially the case now with the added uncertainty caused by the writers and actors’ strikes, which could delay the release of movies currently scheduled for 2024 and 2025.”
Adam Aron previously created AMC Preferred Equity units in an attempt to sell stock without reaching into the common shares cookie jar. To sell common shares, AMC would need the approval of shareholders, who thus far do not approve.
Earlier this year, shareholders filed to eliminate AMC Preferred Equity units and return them to common share status. The proposal was blocked in a Delaware Chancery Court and a settlement was reached. However, a judge denied the settlement.
As reported by Deadline, Adam Aron said “the risk materially increases of AMC conceivably running out of cash in 2024 or 2025, or of AMC being unable to satisfactorily refinance and stretch out the maturity of some of our debt. The risk of financial collapse is not whimsical.”
Adam Aron says that AMC needs to “survive then thrive”. He wants to be able to sell shares and increase capital to eliminate any potential risk (and there are lots of risks a’brewin’) of bankruptcy in the near future.
AMC will continue to revise a settlement and hopes to have reached an agreeable plan to put in place for the next AMC stockholders election in March.