Posted on 04/09/2020 7:28:22 PM PDT by nickcarraway
MKM Partners' Eric Handler downgrades the stock to a "sell," estimating its "cash burn rate in a no-revenue environment is running at $155 million per month, which likely keeps AMC liquid until June/July." Wall Street analysts are seeing a Chapter 11 bankruptcy filing from cinema giant AMC Theatres as increasingly likely.
MKM Partners analyst Eric Handler on Thursday downgraded his rating on shares of the exhibitor from "neutral" to "sell," saying that "bankruptcy appears likely."
That followed Loop Capital analyst Alan Gould's Wednesday downgrade to a "sell" in a report that concluded: "We think bankruptcy is a distinct possibility, and at a minimum, the company will require a highly-dilutive financing."
Handler in his Thursday report explained: "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. Further fueling our liquidity concerns is AMC's decision to stop paying rents to landlords effective April."
AMC, in which Chinese conglomerate Dalian Wanda Group owns a majority voting stake, has been looking for various ways to reduce costs, in late March furloughing all of its 600 corporate employees, including CEO Adam Aron, following the closure of all its cinemas. It had earlier already cut its dividend by 85 percent.
WATCH AMC Closes All U.S. Theaters Amid Spread of Coronavirus | THR News PLAY VIDEO Handler said though that even if AMC is able to tap government bailout funds, as management has signaled it plans to do, "we believe the weight of its balance sheet will make for tough sledding given the company's high leverage, thus making a reorganization inevitable." That comment was a reference to a potential Chapter 11 bankruptcy filing, which leads companies, their lenders and a court to develop a restructuring plan.
Handler highlighted that AMC, which he called "the exhibition company we view with the least financial flexibility," at the end of 2019 had $265 million of cash on hand and $332 million available on its credit lines for a total of nearly $600 million. "We believe the company's monthly cash burn rate in a no-revenue environment is running at $155 million per month, which likely keeps AMC liquid until June/July," he concluded.
Handler cut his fair value estimate for AMC's stock from $7.50 to $1 and lowered his first-quarter financial estimates. He cut his adjusted earnings before interest, taxes, depreciation and amortization estimates to a loss of $13 million, compared with a year-ago profit of $108 million. His revenue estimate went down to $931 million, reflecting "a domestic box office decline of 26 percent as theaters have been shuttered since mid-March and a 20 percent decline internationally."
Handler also cut his 2020 outlook for AMC's adjusted EBITDA to a loss of $293 million, compared with a $771 million profit in 2019. Full-year revenue he expects to fall 44 percent to $3.05 billion. The revisions assume cinemas remain closed until August.
Unlock the fooken economy!!!!
Sit down movie theaters are dinosaurs anyways.
Nobody under 40 goes to a theater anymore.
I hope not. I love theaters. Used to sneak in as a kid all the time and watch movie after movie. As an adult I sometimes get the temptation.
Maybe these guys will go out of business so an American can buy it up.
I’m interested in looking towards seeing if there is a further shift to the left by actors and actresses.
If the Chinese company manages to sell this chain off it will be interesting to see if it can survive under other leadership.
And if the leftest are less pro-Chinese.
Sadly, the movie theater business is in for a world of hurt. Other than maybe cruises, I can’t think of a business that’s likely going to be hit as hard. On the one hand, you have politicians legally prohibiting movie theaters from operating. Who knows how long that will last in some places? And even when they are allowed to re-open, I can’t see their audience rushing back. Even if this virus were totally eradicated in a few months (which is probably unlikely), a lot of people are going to be newly comfortable with the myriad streaming options they’ve become all too familiar with over the past month.
“Handler said though that even if AMC is able to tap government bailout funds, as management has signaled it plans to do, “we believe the weight of its balance sheet will make for tough sledding given the company’s high leverage, thus making a reorganization inevitable.” That comment was a reference to a potential Chapter 11 bankruptcy filing, which leads companies, their lenders and a court to develop a restructuring plan.”
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Why is American bailout money, available to a Chinese company?
“AMC, in which Chinese conglomerate Dalian Wanda Group owns a majority voting stake, ...”
Theaters are one example, as are sporting events and concerts where people are packed in line sardines.
Playing in an empty arena just isn’t going to bring in the bucks.
Can Hollywood be far behind?
Maybe.
It’s a generational thing.
I have a *bunch* of nieces and nephews, millenials, who haven’t been to a movie theater since their parent took them to see animated stuff when they were kiddos.
Hubby and I haven’t been in over 10 years. We prefer to watch them in our home, with our food, sitting on our furniture. No sticky floors, vague damp spots in the chair or $10 tiny box of popcorn.
When tech for decent picture/sound was very expensive, it made sense to have things like movie theaters. Now though...
AMC, in which Chinese conglomerate Dalian Wanda Group owns a majority voting stake,
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Better not get taxpayer bail outs. This is one reason why Hollywood is so AntiAmerican .
I used to enjoy a date with the wife for dinner and a nice movie. Been years since we’ve done it though. For one thing, we can’t seem to agree on a movie anymore worth going out to see.
Movie Theaters are going the way of Blockbuster Video.
>>>Why is American bailout money, available to a Chinese company?
Because it employs thousands of Americans in is theaters.
Yep, that’s my struggle, I generally gravitate towards foreign movies now.
I’m on my 3rd free Netflix trial. Gott look deep to find something to watch. That Tiger King stuff is not worthy.
Not anymore...
NO MONEY TO CHINESE COMPANIES!!! Laid off employees get the necessary benefits.
So, it is still a communist Chinese company. Help the AMERICAN workers, but not the communist Chinese company.
Don’t blame the virus for any bankruptcy...
TRY MAKING SOME DECENT MOVIES.
I really think you, Hollywood, don’t have a clue about making a movie without insulting your audience one way or another.
By the way, high tech destruction of whole cities gets old after a while.
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