The parent company of Odeon has warned that the lack of new blockbusters fuelling record low movie-going could mean it will run out of cash as soon as the end of the year.
Shares in US-listed AMC Theatres, the world’s largest operator of cinemas, plunged 12% in early trading as rattled investors reacted to a warning that it will need to raise a significant amount of cash to keep operating if the dire conditions persist.
“Existing cash resources would be depleted by the end of 2020 or early 2021,” the company said. “[Thereafter] the company will require additional sources of liquidity or increases on attendance levels. The required amounts of additional liquidity are expected to be material.”
Cinema owners are struggling as Hollywood studios remain unconvinced movie-goers are ready to return en masse, and they are not willing to risk having the big budget films, which cinemas desperately need to show, fail at the box office.
Last week, Disney promopted the wrath of cinema owners after deciding to take family blockbuster Soul out of the Christmas schedule and instead premiere it on streaming service Disney+. The move has left Wonder Woman 1984 as the only bonafide new Hollywood blockbuster set for the big screen this year.
AMC, which has kept its cinemas open in the US while a quarter of its Odeon sites in the UK operate only at weekends, criticised rivals choosing to shut their doors.
Rival Cineworld, the world’s second-biggest operator which is struggling with £6bn worth of debt, has chosen to shut all of its 660 sites in the US and UK until the prospects for the industry pick up.
“Certain competitors have decided to temporarily close theatres in light of the ongoing pandemic and the reduced slate of movie releases may further exacerbate the trend,” AMC said.
AMC said it is exploring options to raise cash, including asset sales, additional debt or equity financing and joint ventures with business partners.
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