AMC CEO Adam Aron says 'it's inconceivable' that the movie theater chain would file for Chapter 11

By James Rogers

Movie theater chain and original meme stock AMC has faced bankruptcy speculation, but this is wide of the mark, according to CEO Adam Aron

AMC Entertainment Holdings Inc. CEO Adam Aron says that Chapter 11 is "inconceivable" for the movie theater chain and original meme stock, despite the turmoil of the last few years.

The pandemic hit AMC (AMC) hard, forcing the closure of movie theaters across the U.S. in March 2020. The company went from beleaguered pandemic victim to meme stock phenomenon in 2021, but continues to face bankruptcy speculation. However, this is wide of the mark, according to Aron.

"Personally, I think it's inconceivable that AMC would have to restructure like Regal Cinemas did and file for Chapter 11," he told The Hollywood Reporter, during an interview at CinemaCon in Las Vegas this week. "One of the things I'm very proud of is that going into the pandemic, AMC was in very strong position."

Related: The future looks 'cautiously optimistic' for AMC, Benchmark says

AMC shares fell 4.9% Thursday, putting the stock on pace for its biggest daily percentage decline since April 1, 2024, when it fell 15.6%. The stock has fallen 94% in the last 12 months, compared with the S&P 500 index's SPX gain of 25.8%.

"We are the biggest and best movie theater chain in the world," Aron added, in his interview with The Hollywood Reporter. "Somehow all of us on this planet got handed COVID as something to deal with. And the movie theater industry has been hit quite hard by COVID, and it's been slow to recover."

Set against this backdrop, the AMC CEO described the Hollywood writers' and actors strikes as "a double whammy," and highlighted the lingering impact of the last few years. "We are already at the four-year mark since COVID shut theaters in March of 2020," he said. "And the box office is still not yet back to where it was before."

Related: AMC CEO calls first part of 2024 'a slog to wade through'

"Having said that, and it's not just me who thinks it, AMC has been more creative and more successful in trying to cope with COVID than just about any exhibitor in the planet," he told The Hollywood Reporter.

Aron often voices his opinion about AMC's critics. On New Year's Eve he slammed the "prophets of doom" who expected to see the company's demise in 2023. "To the prophets of doom certain that AMC would fail as a company and be forced into bankruptcy court in 2023: It is December 31, so we all know that YOU WERE WRONG," he wrote on X, formerly Twitter.

The movie theater chain is on a mission to tackle its debt load. In December, AMC completed an at-the-market equity offering, raising approximately $350 million as it attempts to reduce its debt burden.

Related: AMC CEO Adam Aron's pay package grew to $25.4 million in 2023, but he says it's worth $16.5 million less amid share decline

AMC's total debt, including finance leases, at the end of 2023 was around $4.56 billion, down from $5.01 billion at the end of 2022, the company said in its fourth-quarter earnings release.

Last month, AMC filed to sell up to $250 million in stock. During the conference call to discuss AMC's fourth-quarter results, Aron highlighted the need for cash and pointed to the $418 million raised through the company's AMC Preferred Equity Units, which were converted to common stock in August 2023. "There can be no argument, cash is king," he said.

In a note released this week Benchmark analyst Mike Hickey highlighted AMC's debt burden but also pointed to the weapons in its arsenal. "With a significant $2 billion debt maturity looming in 2026, AMC benefits from having the largest Imax presence and potential growth in premium viewing formats," he wrote. "The future appears cautiously optimistic as the cinema sector prepares for upcoming blockbuster releases."

Related: AMC CEO says domestic box office has 'finally turned upwards'

While AMC has faced bankruptcy speculation, "an immediate collapse is deemed unlikely," according to Benchmark's Hickey.

-James Rogers

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04-10-24 1225ET

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