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AMC Entertainment CEO Adam Aron has expressed optimism about the future of his cinema chain as Cineworld, its biggest competitor, is reportedly preparing to file for bankruptcy.
On Friday, sources familiar with the matter told The Wall Street Journal that the owner of Regal Cinemas plans to file for Chapter 11 in the United States and possibly file for bankruptcy in the United Kingdom. Kirkland & Ellis LLP and AlixPartners have reportedly been brought on board as advisors on the process.
Representatives from Cineworld, AlixPartners and Kirkland & Ellis LLP did not immediately respond to FOX Business’ request for comment.
| ticker | security | Last | change | change % |
|---|---|---|---|---|
| AMC | AMC ENTERTAINMENT HOLDINGS INC | 02/18 | -1.42 | -7.31% |
| CNWGY | CINEWORLD GROUP PLC | 0.19 | -0.16 | -45.98% |
On Wednesday, Cineworld said that recent admissions have fallen short of expectations, despite a gradual recovery in demand since cinemas reopened in April 2021.
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“These lower admissions are due to a limited film slate, which is expected to continue through November 2022 and is expected to negatively impact the Group’s trading and cash position in the near term,” the company said.
A CineWorld cinema building in Cardinal Park, Ipswich, Suffolk, England, UK (Geography Photos/UCG/Universal Images Group via Getty Images/Getty Images)
Cineworld said it is “assessing various strategic options to both obtain additional liquidity and to restructure its balance sheet through a comprehensive deleveraging transaction”.
It warned that any deleveraging transaction would “likely result in a very significant dilution of existing holdings” in the company.
“The Group’s operations are expected to be unaffected by these efforts and Cineworld expects to continue honoring its ongoing business obligations to counterparties,” the company added. “Cineworld continues to welcome guests to its cinemas across its global markets as usual and without interruption.”
In a statement Thursday, Aron said that while AMC’s Q3 2022 film slate is likely to be “relatively weak,” the company remains “fairly optimistic about increasing demand” for its theaters in Q4 2022 and calendar year 2023.
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AMC ended the second quarter of 2022 with more than $1 billion in liquidity after raising “significant” amounts of cash during calendar years 2020 and 2021.
“Our new AMC Preferred Equity security, trading on the New York Stock Exchange on Monday, August 22, should also make us a much stronger company,” added Aron.
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At the time of publication, Cineworld shares are down more than 85% year-to-date, while AMC shares are down about 33% year-to-date.