AMC is America’s largest movie cinema chain. With the outbreak of the COVID-19 disease, AMC is among other movie chains that have suffered as a result due to massive shutdowns. With all of the movie theaters shut down, AMC’s credit has been downgraded due to an “imminent” risk of defaulting because of the coronavirus.
According to The Wrap, S&P Global has:
“…downgraded its credit rating for AMC Entertainment to CCC- from B.”
The company’s outlook goes from “highly speculative” to “Default imminent, with little prospect for recovery.”
S&P Analysts state:
“We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer, and we believe the company will likely breach its 6x net senior secured leverage covenant when tested on Sept. 30, 2020, absent a waiver from its lenders.”
AMC was the first chain to close all of its 634 movie theater locations across the United States and Canada, as well as the 120 locations in the UK and Ireland. It’s also furloughed corporate employees, which included CEO Adam Aron. This was all part of a plan to:
“…preserve cash and to ensure that AMC can reopen our doors once this health crisis has dissipated.”
Despite this, S&P analysts have predicted that the company’s liquidity source will only last:
“…through mid-summer.”
I mean, everyone is suffering due to the COVID-19 outbreak. It’s not just AMC theaters. Small businesses have been forced to shut their doors permanently. People are getting laid off left and right. Unemployment is skyrocketing. It shouldn’t be a surprise that AMC is suffering too.
Source: IGN
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