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Law360 (September 24, 2020, 9:04 PM EDT) —
Theater chain giant AMC Entertainment said Thursday it would be selling up to 15 million shares with the guidance of Weil and Latham to raise money as many of its U.S. theaters remain closed amid the coronavirus pandemic, according to a regulatory filing.
AMC Entertainment Holdings Inc., advised by Weil Gotshal & Manges LLP, is tapping the markets for money after floating a $500 million debt offering in April Holdings Inc. AMC received the debt financing after it was sued for $7.5 million in unpaid rent it owed in Florida.
For the offering announced Thursday, AMC didn’t say how much it was selling the shares of common stock for, but its shares closed at $4.78 each on the New York Stock Exchange Wednesday, before the registration statement was filed with the U.S. Securities and Exchange Commission.
AMC told the SEC it would use the proceeds from the share sale for general corporate purposes, which could include paying off debts or making investments.
The Leawood, Kansas-headquartered theater company, which had proclaimed itself the largest movie exhibition company in the world, ran about 1,000 theaters worldwide and employed about 39,000 full- and part-time workers before the pandemic.
But the pandemic devastated AMC’s finances as it was forced to shutter theater doors. Its revenue for the three months ending June 30 were down 98.7% from the same period last year, according to its quarterly financial report filed with the SEC in August. Its overall performance for the six months ending June 30 was slightly better, with revenues dropping 64.5% year-over-year, the report shows.
AMC said in an update to investors Thursday that so far 461 or 77% of its U.S. theaters have reopened since it first began resuming operations in June. The company said the other 23% of U.S. venues that remain closed are in California, New York, Maryland, Michigan, North Carolina and Washington state, where it said some of its most productive theaters are located.
The company said just 10% of its international theaters remain closed.
Since reopening, AMC’s U.S. locations have served 1.4 million customers as of Sept. 4, down 81% year-over-year, while international theaters have served 3.6 million guests, which is a decrease of roughly 74% from last year, according to SEC filings.
AMC also noted that its need for additional sources of liquidity in the future would be reliant about attendance levels in the fourth quarter, which would ultimately impact admissions and food and beverage revenue, according to SEC filings. The theater chain added that postponements of major releases slated for the Thanksgiving and Christmas holidays would likely further hurt its liquidity.
“We currently estimate that unless theatre attendance levels improve significantly from the third quarter of 2020 to the fourth quarter of 2020 and again into 2021 and we achieve levels of attendance approaching approximately three-quarters of normalized levels, we will continue to require additional sources of liquidity to meet our obligations as they become due,” AMC told investors in the financial update filed with the SEC.
Representatives for AMC did not immediately respond to requests for comment.
–Additional reporting by Tom Zanki and Hannah Albarazi.
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