AMC Sells Even More Shares as Bankruptcy May Loom

AMC Sells Even More Shares as Bankruptcy May Loom

© Reuters.  © Reuters.

By Christiana Sciaudone — AMC Entertainment (NYSE:AMC) tumbled 5.5% after filing to sell up to 50 million shares as theaters remain ghosts of their former selves.

Shares are down 50% this year as communities shut down in a bid to prevent the spread of the coronavirus, meaning no popcorn and big screens for most of the world for most of the year. Rival Cinemark, on the other hand, rose 2%.

AMC, the largest theater chain in the U.S., is adding to the 200 million shares sold earlier this month, raising $104 million as of Dec. 28, at an average price per share of $2.81.

The movie chain is still at risk of going bankrupt. It doesn't help that all 2021 theatrical releases from Warner Bros. are going to be available on HBOMax simultaneously.

AMC previously said it had funds to remain in business until early 2021, but would need at least $750 million to make it through the year.

Bankruptcy may not be the worst option.

“The easy answer is that if they declare bankruptcy, it is likely to be a reorganization rather than a liquidation,” CNBC reported Wedbush analyst Michael Pachter as saying. “In bankruptcy, they can wipe out their lease obligations and renew those leases that make sense, so arguably they can lower their overall operating expense.”

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