Baller Alert Entertainment & Lifestyle
Our country’s largest theater chain, AMC, has been forced to close as part of a response to the coronavirus pandemic, which could not have struck the business at a worse time.
According to the NY Post, the company was already facing a deficit of more than $5 billion at the end of 2019, with losses totaling $149 million.
In a note to investors sent on Wednesday, Loop Capital analyst Alan Gould wrote that he expects one-quarter of movie theaters in the US will close in the aftermath of the coronavirus pandemic.
Since mid-March, COVID-19 has caused the temporary closure of nearly all of the nation’s movie theaters and forced studios to delay productions and premieres for a slew of upcoming summer blockbusters.
Without knowing the answer to big questions like: How long will the COVID-19 crisis last, and how much pain can landlords take?
Analysts cannot begin to strategize on how businesses can start to recover.
“Without ticket and concession revenue, there will likely be a lot of unpaid rent, and it’s anyone’s guess whether the landlords will terminate the leases and evict the tenants or whether they will just deal with it,” said Wedbush Securities analyst Michael Pachter.
Pachter also warned that many moviegoers simply wouldn’t return to theaters after the pandemic is over.
“Even if we put the virus behind us, lots of people are going to avoid retail and movie theaters till they are comfortable that they are inoculated against the next iteration of the virus,” Pachter warned.
AMC furloughed about 600 employees last week, including its CEO.
“We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer, and we believe the company will likely breach its 6x net senior secured leverage covenant when tested on Sept. 30, 2020, absent a waiver from its lenders,” analysts said regarding the struggling theater group.
