AMC is the country's largest movie theater chain.
It is also mired under more than $5 billion in debt.
Due to the shutdown due to the coronavirus, the company finds itself in dire financial straits. There is a question about how long the company can survive.
The movie industry is being affected on all levels. Studios found that production was slammed. There is no word when things will get back to the way they were before.
Obviously, over the past three months, nobody was visiting the movie theaters. Here we also see major questions going forward. Will people return and, if so, when? At the same time, how will the social distancing be handled?
All this is putting the company in position where it has to try and negotiate a new plan regarding its debt.
This is where it is encountering some resistance.
The debtors are not very accepting of AMC's proposal. In the first run, AMC wants to cut about $1 billion in debt while also paying 51-53 cents on the unsecured bonds.
Obviously, the debt holders are not thrilled with this prospect. It is a situation where people have to decide how to try and salvage something.
AMC saw its loss widen to over $2 billion. Revenue fell in the first quarter and Q2 will be even worse. The company is only now starting to open theaters in the United States and UK.
We see a similar situation arising with the mall owners and retail locations. If the landlords take a hard line, they could end up fighting for their money in bankruptcy court.
With AMC, some of the debt holders might be comfortable entering bankruptcy court. However, a movie theater chain does not have an abundance of assets to sell if the company requires liquidation.
On a larger scale, are we going to see a paradigm shift taking place. For decades, going to the movies was a popular form of entertainment. The theater industry survived the introduction of in-home recorders and the video rental age. It also was able to weather the streaming wave although that is only starting to move forward.
We could be seeing the end of the movie theater.
Whether that is the case, we might see the end of AMC long before the paradigm shift.
The next couple months will tell the story of whether it has a future or not. So far, the debt holders are standing firm.
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