(Gray News) - A credit rating agency has given AMC Theaters the thumbs down.
S&P Global downgraded AMC Entertainment, which runs the largest movie theater chain in the U.S., from B to CCC-, “currently vulnerable to nonpayment,” citing coronavirus closures and the company’s debt.
Analysts say the company’s theaters may remain closed beyond June because of the coronavirus, and the company won’t have enough liquidity to cover its substantial debts.
AMC closed all theaters for six to 12 weeks on March 17.
AMC Theaters reportedly sent a letter to the landlords of its locations saying it was not paying the rent due April 1 and had furloughed 25,000 employees, Deadline reported.
The company also furloughed 600 corporate employees, including its CEO, The Wrap said.
AMC reported a deficit of more than $5 billion at the end of 2019, The Wrap said, having invested in its A-List subscription service, as well as buying Odeon, UCI Cinemas Holdings and Carmike Cinemas in 2016 and Nordic Cinema Group in 2017.
“We don’t have a penny of revenue coming in the door,” CEO Adam Aron told CNN in late March. “Three weeks ago, AMC was an immensely healthy company, and now, with expenses out the door and no revenues, we are burning through cash. What we need is liquidity and only the government is going to provide that.”
AMC runs 1,000 theaters and 11,000 screens across the globe.