AMC Stocks Skyrocket After $500 Million In New Debt To Ride Out Coronavirus Closures

AMC Entertainment has had a busy couple of days. On Thursday, the theater giant announced that the company will raise $500 million in new debt to bolster its balance sheet liquidity. Friday, their stocks rose even though the company will not be reopening operations through June.  

Concerns over coronavirus have closed down movie theaters across the nation leading some to ask if theaters are going to survive this? AMC has disclosed that is has been generating no revenue while its U.S. theaters have been closed. 

AMC issued a statement saying, “AMC intends to use the net proceeds from this offering for general corporate purposes, including further increasing AMC’s liquidity.” The company also disclosed the funds from the senior notes offering will have to be repaid in 2025. AMC further said as of March 31, the theater chain had $299.8 million in cash which included borrowings of $215.0 million drawn from a revolving line of credit facility, and another £89.2 million tapped from another revolving credit facility for Odeon Cinemas in the U.K.

AMC said in a statement, “Due to significant actions taken by the company, we believe our current cash balance is sufficient to withstand a global suspension of operations until a partial reopening in July. After giving effect to the proposed notes offering, we believe the company will have sufficient liquidity to withstand a global suspension of operations until a partial reopening ahead of Thanksgiving.” 

AMC shares have surged after these statements were given. On Friday, the stock closed up 31% at $3.20 on the New York Stock Exchange. However, even with the surge, the stock price remained down approximately 60% from late February just before coronavirus concerns sent Wall Street falling. 

While AMC seems to be setting their sites on July for reopening at the earliest, this week President Donald Trump released a set of guidelines for opening back up businesses. The guidelines include three waves of reopening businesses. Movie theaters were listed in the first wave. While it falls on the states on when each phase of reopening will begin, the white house has called for “strict physical distancing protocols” upon reopening.