(Adds Cineworld background, drop in attendance, and quote)
Oct 13 (Reuters) - AMC Entertainment Holdings Inc may need to raise additional capital either entirely or mostly through equity, its CEO told Reuters late Tuesday, as the cinema operator grapples with the impact of the coronavirus pandemic.
There was no further contingency planning on the table beyond raising additional capital at the moment, Adam Aron said in an interview. He did not mention the amount that the company was looking to raise.
Aron denied an earlier Bloomberg report that said the company was considering a range of options, including a potential bankruptcy protection, calling it “false” and “completely inaccurate”.
“At the moment there is no Plan B under consideration,” he said. “If we were literally running out of cash, we would have to come up with a Plan B and we have a pretty good sense of what that Plan B would be but that is not something we are actively considering today.”
Lenders to the cinema chain have held preliminary talks among themselves about providing the movie-theater company with financing if it decides to file for Chapter 11 court protection, Bloomberg had reported bloom.bg/3nVNKRx.
The largest theater chain in the world said on Tuesday it continued to explore sources of additional liquidity as it sees its cash resources largely depleted by the end of 2020 or the start of 2021 at its existing cash-burn rate.
Attendance at AMC’s cinemas has slumped 85% on-year ever since they reopened after lockdowns were eased, the company said.
With the pandemic changing consumer behavior globally, more viewers are being driven to digital video services as people spend more time at home due to restrictions on movement and a switch to working from home, which has shuttered theaters.
AMC has resumed operations of about 494 of its 598 U.S. theaters, with limited seating capacities between 20%-40%.
“We would be raising equity in the market and discussing with a variety of constituencies (like) our theater landlords, with movie studios, with potential minority investors in taking an equity stake in AMC,” Aron said.
“Mostly equity, yes. Either all or vast majority being equity”, he added, when asked if the additional potential capital raise was going to come through equity.
The company previously raised $300 million in new first lien financing in July and $500 million in April.
“Now we are going to try to do it for a third time and push out our (financial) runway deeper into 2021,” the AMC CEO said in the interview.
The company said last week that most of its theaters in the United States and Europe would remain open, with several movie releases lined up for the next two months.
Cineworld, the world’s second-biggest cinema operator, said earlier this month it was considering temporarily closing all its screens in the U.S. and Britain after studios pulled some major releases such as the latest James Bond film. (Reporting by Kanishka Singh; Editing by Himani Sarkar, Muralikumar Anantharaman and Sherry Jacob-Phillips)
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