(Reuters) -AMC Entertainment Holdings said on Friday it will get a $100 million investment from Mudrick Capital Management, a shot in the arm for the cash-strapped movie theater operator struggling with delayed Hollywood releases and theater closures.
AMC also said it would need at least $750 million of additional liquidity to fund its cash requirements through next year, adding that it would sell shares and renegotiate rents to prop up its finances and stave of a possible bankruptcy.
The company’s finances have been battered due to the COVID-19 pandemic, forcing it to announce share sales at least thrice since raising concerns about its ability to continue running its business in October.
AMC had about $320 million in cash and cash equivalents as of Nov. 30, and in the absence of additional liquidity it expects existing cash resources to be depleted during January next year. (https://bit.ly/3m9zFNS)
Mudrick, an existing holder of second lien notes issued by AMC, will also convert $100 million of existing AMC debt into AMC stock. As part of the transactions, the company will issue nearly 22 million shares to the investment firm.
Theater chains globally have been devastated by the virus outbreak, with many forced to lay off workers and borrow funds to stay afloat. From Oct. 1 to Nov. 30, AMC said overall attendance at its U.S. theaters declined about 92% compared to a year earlier.
The company said the pandemic-induced challenges had been aggravated by Warner Bros studio’s announcement it would debut all its 2021 films in theaters and on the HBO Max streaming service on the same day, adding that it may result in other studios following suit.
AMC’s shares have dropped 44% this year after touching an all-time low in April.
(Reporting by Ayanti Bera in Bengaluru; Editing by Shounak Dasgupta)