AMC Entertainment Holdings Inc.’s chief executive officer says the cinema chain is doing everything it can to raise fresh cash to weather the COVID-19 pandemic and isn’t considering bankruptcy at the moment. The shares fell more than 20 per cent in New York trading.

“We’re going to throw all of our efforts now into raising additional capital, primarily equity, to lengthen our runway even more,” CEO Adam Aron said late Tuesday in an interview with Bloomberg News. “We’d like to succeed in this effort. If we don’t, obviously we’ll have to consider other options down the road. But that time has not yet arrived, and any reports to the contrary are wholly inaccurate.”

Bloomberg News reported earlier, citing people with knowledge of the matter, that the company was considering a range of options that include a potential bankruptcy to ease its debt load as the pandemic keeps moviegoers from attending and studios from supplying films.

Lenders to the world’s biggest cinema chain have also held preliminary talks among themselves about providing financing if AMC decides to file for Chapter 11 court protection, the people said. They asked not to be identified discussing the private talks.

Seeking Cash

AMC said in a filing Tuesday that cash could run out by the end of this year or early in 2021 if attendance doesn’t pick up, and it’s exploring actions to boost liquidity that include asset sales, renegotiating leases, joint ventures or other arrangements with existing business partners, and debt or equity financing. There’s significant risk that its efforts will fall short or fail, AMC warned.

Shares of AMC dropped 75 cents to US$2.79 at 9:49 a.m. in New York. They’re down more than 60 per cent this year.

Cinema chains are facing a chicken-and-egg problem with no near-term solution: As local capacity restrictions and audience skittishness keep U.S. theaters largely empty, studios are delaying most of their major film releases into 2021 and beyond, which gives consumers still less reason to buy tickets.

AMC’s attendance since the resumption of business in the U.S. is down about 85 per cent from the same period a year ago, according to the filing.

AMC has been actively raising cash since the start of the pandemic, including striking a deal in July with some bondholders and private equity fund Silver Lake that infused the company with over US$350 million of fresh cash and other liquidity improvements and cut borrowings by more than US$550 million.

Lender Actions

The company said in its filing Tuesday that it had raised about US$37.8 million through an at-the-market offering of about 9 million shares of its Class A common stock.

As the company continues its fundraising efforts, lenders have begun to discuss options including a proposal for a debtor-in-possession loan that would fund AMC’s business if it ultimately filed for bankruptcy, said the people with knowledge of the matter.

No formal proposals have been exchanged with AMC, the people said. The situation remains fluid and plans could change, depending on negotiations and market conditions, the people said. This includes the impact of the coronavirus, with ticket sales suffering because state and local officials are urging moviegoers to stay home.

As for whether AMC is considering bankruptcy, it’s not “at this time,” Aron said. “And we have not contemplated bankruptcy prior to this point,” he said.

Lenders are getting advice from lawyers at Gibson Dunn & Crutcher and bankers at Greenhill & Co., Bloomberg previously reported. The company’s consideration of bankruptcy and discussions among lenders were reported earlier by Reorg, the distressed-debt news provider.