AMC Theaters May Be Unable To Survive The COVID-19 Pandemic And Could Be Forced To Close Down

Bad news for AMC Theaters today as analysts believe the popular, debt-ridden theater chain could be forced to close their doors for good after the COVID-19 pandemic passes nearer the end of 2020!

The Wrap reports that AMC Entertainment's credit rating has been downgraded from a 'B' to 'CCC-,' and that means, "Default imminent, with little prospect for recovery." AMC is a victim of the COVID-19 pandemic sending shockwaves across the globe, and being forced to close its doors has put the iconic theater chain's future in serious doubt.

"We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic," analyst S&P Global confirms. "We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer."

The company is in serious debt after reporting a $5+ billion deficit at the end of 2019 and losses of $149 million. They've also been making a lot of acquisitions in recent years, including Odeon Cinemas, potentially leaving that company's future in doubt as well moving forward.

"While unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and if we expected the company would be able to generate substantial cash flow in 2021," the analysts continued. "This would likely require conclusive knowledge about the length of the theater closures and a view that the box office would return to normalized levels in 2021."

It's not looking good for AMC Theaters at this time, and it's concerning that theaters are expected to be closed through June. It also makes us wonder which chains will be next to face problems.

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