There are so many box office films being immediately released to streaming platforms, it looks as though AMC theaters have no source of income at the moment. AMC’s top executives have announced thye will take significant pay cuts to keep everything afloat but according to The Wall Street Journal, a report from “S&P Global” has AMC Entertainment’s credit rating being downgraded from ‘B’ to ‘CCC-’, which means, “Default imminent, with little prospect of recovery.”
“We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer. While unlikely, we could raise the rating if AMC were able to secure additional liquidity without further burdening its capital structure and if we expected the company would be able to generate substantial cash flow in 2021. This would likely require conclusive knowledge about the length of the theater closures and a view that the box office would return to normalized levels in 2021.”
The company has furloughed 600 corporate employees but the S&P reports seem to think that won’t be enough to keep them in business.