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As Movie Theater Closures Continue, AMC Entertainment Plans $47.7M Stock Sale

AMC Entertainment plans to sell 20 million of its Class A shares, netting $47.7 million, as it contends with ongoing shutdowns of many of its movie theaters and a withdrawal of studio films from the 2020 release calendar.

COVID-19 hampered the release of Tenet in August and aside from less-expensive, targeted titles, wide releases have shifted to either later release dates or streaming debuts.

The company disclosed the move in an SEC filing Monday. Among the risk factors for investors listed by AMC in the filing is “our ability to obtain additional liquidity and our ability to continue as a going concern.”

Three weeks ago, the No. 1 exhibitor disclosed that its cash supply could run out by the end of the year, sparking a new round of anxiety that it could end up in bankruptcy. While key markets like San Francisco have come back online, New York — where AMC is the dominant commercial player — remains off-limits, with no sense of when state health officials may change their tune. Regions of New York outside of the city last month reopened theaters. Los Angeles also is unplugged for the time being.

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The fate of major exhibition chains (and of theatrical moviegoing itself) has been a major storyline in the entertainment business during the coronavirus pandemic. It is not yet clear who might be a candidate to come to theaters’ rescue. Movie studios have more flexibility to potentially invest in theaters now that the 1948 Paramount decree has been rolled back, but executives have poured cold water on that scenario recently.

In a similar vein, tech companies like Netflix or Amazon would seem to have no constraints financially but have countered speculation that they could swoop in and buy theaters. Netflix reached deals to operate the Egyptian Theatre in LA in a partnership with the American Cinematheque and also to run New York’s Paris Theatre but execs have characterized both moves as one-off opportunities.

Private equity firms are one likely source of equity for theaters. Silver Lake already owns 31% of AMC and increased its position with a $600 million infusion in 2018.

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Cinema Shares Sink Even As Market Rallies; Hit By James Bond Delay, Cineworld/Regal Theater Closings

Exhibition shares headed south Monday amidst a broader market rally as continued delays in big studio releases pushed a major circuit to close its doors, again, and raised a new round of jitters over the long term health of the sector.

Regal parent, U.K. chain Cineworld, which is traded in London, saw its share plunge by 50% (it was down 33% at latest check). Stateside, AMC Entertainment, the world’s largest exhibitor, had dropped 10% in late morning trade; Cinemark nearly 14%; Marcus almost 8% and in-theater ad agency National CineMedia more than 9%.  Imax, with a boost from its strong operations China, was steadier but still down about 2.5%.

MGM on Friday announced to push the next James Bond movie No Time To Die out of November and into Easter 2021. Theaters have repeatedly warned that high-profile product was key to drawing an audience during COVID and were looking to Bond as an inflection point. Cineworld CEO Mooky Greidinger bluntly laid blame as well on  New York Governor Andrew Cuomo’s seemingly intractable — and for the industry inexplicable — resistance to opening movie theaters in the state even as other venues and businesses resume operations. 

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Cineworld Boss Mooky Greidinger Says Decision To Close U.S. & UK Cinemas Was Spurred By NY Governor Andrew Cuomo's "Inflexibility"

Cinemark has said it has funds to see it through a prolonged shutdown. AMC Entertainment has cash to see it into next year — or for about six months, according to S&P which trimmed the company’s credit rating Friday. It’s expensive run theaters — particularly in the COVID era -and the cost benefit analysis becomes increasingly unclear with major markets shut and new releases scarce.

Imax was holding steadier. The company is listed on the U.S. and Hong Hong exchanges and a large operation in China,, which has back in business, is helping it buck the trend. Imax announced this morning a record-breaking $13 million opening weekend of the National Day Golden Week holiday in China, a historically strong box office period that runs from October 1 to 8 this year. The figure marks IMAX’s best-ever opening weekend for the National Holiday, up 25% over last year despite a 75% capacity limitation across the country.

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