AMC CEO optimistic on future as rival Cineworld shares sink
Cineworld shares fell more than 50% Friday
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AMC Entertainment CEO Adam Aron has expressed optimism about the future of his movie theater chain as Cineworld, its largest competitor, is reportedly preparing to file for bankruptcy.
On Friday, sources familiar with the matter told the Wall Street Journal that the Regal Cinemas owner plans to file a Chapter 11 petition in the United States and may file an insolvency proceeding in the United Kingdom. Kirkland & Ellis LLP and AlixPartners have reportedly been tapped as advisors on the process.
Representatives for Cineworld, AlixPartners and Kirkland & Ellis LLP did not immediately return FOX Business' request for comment.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMC | AMC ENTERTAINMENT | 4.48 | -0.10 | -2.18% |
| CNWGY | NO DATA AVAILABLE | - | - | - |
On Wednesday, Cineworld revealed that recent admission levels have been below expectations despite a gradual recovery in demand since reopening its theaters in April 2021.
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"These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the Group's liquidity position in the near term," the company explained.
A CineWorld cinemas building in Cardinal Park, Ipswich, Suffolk, England, U.K. (Geography Photos/UCG/Universal Images Group via Getty Images / Getty Images)
Cineworld said it is "evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction."
It warned that any deleveraging transaction would "likely result in very significant dilution of existing equity interests" in the company.
"The Group's business operations are expected to remain unaffected by these efforts, and Cineworld expects to continue to meet its ongoing business counterparty obligations," the company added. "Cineworld continues to welcome guests to its cinemas across its global markets as normal, without disruption."
In a statement Thursday, Aron said that while AMC's film slate for the third quarter of 2022 is expected to be "relatively weak," the company continues to be "quite optimistic about the increasing demand" for its movie theaters in the fourth quarter of 2022 and calendar year 2023.
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AMC ended the second quarter of 2022 with more than $1 billion in liquidity after raising "significant" amounts of cash in calendar years 2020 and 2021.
"Our new AMC Preferred Equity security, which begins trading on the New York Stock Exchange on Monday, Aug. 22, should also make us a much stronger company," Aron added.
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As of the time of publication, Cineworld shares have tumbled more than 85% year to date, while AMC shares are down approximately 33% year to date.