AMC Entertainment has engaged Alvarez & Marsal as financial advisor to assess liabilities and work on liquidity management, according to three sources familiar with the matter.
The company is weighing a potential Chapter 11 filing as liquidity dwindles because of pressing cash burn levels, exacerbated by theater attendance declines with the ongoing COVID-19 pandemic.
AMC said on 4 November that its liquidity will be largely depleted by late this year or early next year, assuming its current cash burn rate and no uptick in theater attendance. The company added that it may not have access to additional sources of liquidity to offset the cash burn, and that if it can’t raise additional funds, it will consider an in-court or out-of-court restructuring.
An ad hoc group of lenders has organized with Gibson Dunn and Greenhill, as reported by Debtwire.
As of 30 September, the company’s all-cash liquidity totaled USD 417.9m, while its USD 325m revolver was fully tapped. During the third quarter, AMC burned USD 385m of cash, while adjusted EBITDA came in at negative USD 334.5m.
The borrower’s USD 1.975bn Libor+300bps term loan due 2026 is quoted in the 68.787/71.565 context, compared to 55.625/57.75 on 2 November, according to Markit. Its USD 500m 10.5% first lien notes due 2025 traded today at 70, down from 71.75 earlier this week but up from trades as low as 53.375 on 29 October, according to MarketAxess.
Valuations across the travel and leisure space strengthened this week after the news that Pfizer‘s vaccine trial demonstrated a 90% success rate.
AMC and A&M did not respond to requests for comment.