Wall Street analysts predict a top movie theater chain will likely have to file for bankruptcy because of the coronavirus pandemic.
“Based on our view that theaters will be closed until at least August and our belief that AMC lacks the liquidity to stay afloat until that time, we expect the company will soon be faced with filing for bankruptcy,” MKM Partners analyst Eric Handler said Thursday in a report. Handler downgraded the theater chain’s stock from “neutral” to “sell.”
The analyst said reorganizing AMC Theatres was “inevitable” even with a government bailout because of the company’s nearly $5 billion in debt. Shares for the company dropped 20% on Thursday.
AMC did not immediately respond to Variety’s request for comment.
With officials advocating for social distancing guidelines to stem the spread of the coronavirus, AMC Theatres announced in mid-March that its theaters would be closed for six to 12 weeks. The company has furloughed 600 corporate employees, including its CEO, during the crisis.
Several big movies that were slated for release, including Marvel’s Black Widow, have been postponed because of the pandemic.
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In compliance with local, state, and federal #COVID19 directives, all #AMCTheatres locations are now closed for at least 6-12 weeks. AMC Stubs A-List memberships will be paused automatically during the time AMC theatres are closed.
— AMC Theatres (@AMCTheatres) March 17, 2020
A March 31, 2018, fact sheet from AMC said the company operated approximately 1,000 theaters and 11,000 screens worldwide. Headquartered in the Kansas City, Missouri, area, the company employed approximately 39,000 full- and part-time associates as of Dec. 31, 2017.
The chain has hired the law firm Gibson, Dunn, & Crutcher LLP for a potential restructuring.
