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- AMC plummeted 14% on Tuesday after it warned that it could file for bankruptcy protection if it's unable to increase its cash position, according to a filing with the SEC on Tuesday.
- The movie theater chain said its $418 million cash position as of September 30 would be depleted by the end of the year or early 2021, barring no additional cash infusion.
- The company announced an at-the-market equity offering to sell up to 15 million shares of common stock, and also said it could rely on asset sales to shore up its cash position.
- The company also announced its preliminary third quarter earnings, according to the filing.
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Barring a surge in increased movie theater attendance or an infusion of cash, AMC Entertainment warned on Tuesday that it could enter bankruptcy protection, according to a Securities and Exchange Commission filing.
The filing related to a new stock offering with Citigroup and Goldman Sachs, where it will sell up to 15 million shares in an at-the-market equity offering.
An ATM offering allows AMC to, at its discretion, sell new stock directly into the market to take advantage of potential price swings in its stock, rather than selling one large block of shares to institutional investors.
AMC has opened 519 of its 598 US movie theaters, with limited seating capacities of 20% to 40%, and plans to open up a dozen more theaters in New York after Governor Andrew Cuomo said on Saturday that movie theaters outside of New York City could reopen on October 23.
Still, despite the reopened movie theaters, not many are venturing out and are instead sticking to in-home entertainment. According to AMC, as of October 16, it experienced an 86% decline in same-movie-theater attendance compared to the prior year.
For the third quarter, AMC expects to report revenue of $119.5 million, a stark decline from its year-ago third quarter revenue of $1.32 billion.
"Due to these factors, as previously disclosed, substantial doubt exists about the Company's ability to continue as a going concern for a reasonable period of time," AMC warned, adding that "in the event of a future liquidation or bankruptcy proceeding, holders of the Company's Common Stock would likely suffer a total loss of their investment."
Shares of AMC fell as much as 14% on Tuesday, and are down 51% year-to-date as of Monday's close.
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