“Theater Closed” signs are posted in front of the AMC Montebello, as the US chain of AMC movie theaters closes for 6 to 12 weeks, On March 17, 2020 in Montebello, California, as the coronavirus (covid-19) epidemic leads to restaurant and school closures and workers working from home in an effort to encourage social distancing.
Frederic J. Brown | AFP | Getty Images
Shares of AMC Entertainment, the largest theater chain in the U.S., vaulted up more than 30% on Friday after the company said a new debt offering will allow it to withstand the closure of its movie theaters until a partial reopening ahead of Thanksgiving.
On Thursday, the company said it intends to raise $500 million in new debt in order to improve its balance sheet. The funds from the senior notes offering will have to be repaid in 2025, the company said.
As of March 31, AMC had around $300 million in cash.
“Due to significant actions taken by the company, we believe our current cash balance is sufficient to withstand a global suspension of operations until a partial reopening in July,” AMC said. “After giving effect to the proposed notes offering, we believe the company will have sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving.”
Currently, AMC has suspended all operations through the end of June and is, effectively, generating no revenue. The company doesn’t expect to continue dividend payments or make any share repurchases this year in order to preserve more cash.
Additionally, it is working with landlords to defer rent payments and has furloughed all domestic theater-level employees. Many corporate-level employees have seen their salaries cut.
Since January, shares of AMC have slumped more than 56%.
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