AMC CEO: “We got the money!”

AMC Theaters CEO Adam Aron told employees in an internal email that the company “got the money” and that “recent press reports of financial disaster for AMC in the next 2 or 3 months have happily been proven to be flat out wrong”.

Aron cited $500 million in new financing combined with existing funds the company had available, amounting to a total of $750 million which he said was what the company would normally spend in fifty days. With no payments going to staff, supplies or film rents, the CEO said the company would strive to lengthen their financial runway well into 2021.

The letter, leaked online, notes that rereleases of older films may occur after some locations open, but that the chain “can not do so for too long” as Aron thinks theaters “are not likely to be all that successful merely with older film product”.

While there is no timeline given, Aron notes the company won’t allow itself to “buckle under political pressure to open prematurely”.

“Openings in June and July are possible but not definite,” wrote Aron. “Is it possible that June and July will be our months for the lights of AMC and Odeon to shine brightly once again? Hopefully, yes. But is it possible that our re-opening is delayed beyond then? If life has taught us all anything in the past couple of months, it is literally that anything is possible.”

The full letter can be found below.

NOW WHAT?

I hope that you all are healthy and safe. Your safety is extremely important to me and to AMC, and will require thoughtful planning by AMC for the time when we reopen both our theatres and our various regional, divisional and global headquarters offices, whenever that will be.

$500 MILLION IN NEW MONIES ARE IN OUR ACCOUNTS

With the completion on Friday of a new $500 million financing, the recent press reports of financial disaster for AMC in the next 2 or 3 months have happily been proven to be flat out wrong. What a relief.

We got the money! Added to what was already in our coffers, more than $750 million now sits in our bank accounts. Sounds like a huge number right? Well think about this. Last year, in 2019, AMC went through $750 million in total spending every fifty days.

Of course, with all our theatres closed, we have drastically reduced our expenses in 2020. As you know far too well, furloughs have hit every level of AMC, including all of our senior officers and me. So, our payroll expense is way down. There are no movies showing, so there are no film rents. We are working with our theatre landlords to defer theatre lease payments. With no activity at our theatres, we are not buying supplies. Capital investment spending has been put on almost a complete halt.

With no revenues coming in, we simply had to have this slashing of expenses. And as we look ahead, we will need to maintain our relentless focus on keeping spending down. This is because we still have plenty of fixed cost bills that must continue to be paid. So, our current situation is that we tap into and reduce our cash reserves every single day.

We have said publicly that the monies we now have in hand can guarantee our company’s survival at least until the end of November of 2020, even if all our theatres stay closed. And, we have already put other strategies into motion immediately to further increase the amount of cash we have on hand, as we strive to lengthen our financial runway well into 2021.

LET’S GET OUR THEATRES OPEN

The best thing we can do to stop the cash drain that comes from having continuing expenses and no revenues is to get our theatres open. The sooner moviegoers buy tickets from us again, and drinks (both soft drinks and harder drinks) from us again and popcorn and other food items from us again, the sooner we will get you back to work and the sooner we will increase rather than decrease our cash reserves.

EASIER SAID THAN DONE

But to get our theatres or offices open, all of the following conditions must be true:

1. It must be lawful to re-open our theatres and offices. Many parts of the U.S., and many countries across the globe, are still looking at shelter-at-home orders and/or prohibitions against gatherings in large groups.
2. It must be safe to re-open our theatres and offices. We will not and cannot open back up, if our guests or associates are not safe. You can be sure that we are actively exploring all sorts of possibilities to ensure safety for our guests and for our associates. Masks, gloves, new cleaning protocols, wipes, temperature scanning, social distancing and other strategies are all being explored. Not every idea will be implemented, but the totality of our actions will be comprehensive and convincing. And we won’t allow ourselves to buckle under political pressure to open prematurely, if that puts our people or our guests at grave risk if we do.
3. It takes time to re-open 1,000 theatres. We will have to re-supply all of our theatres. We will have to bring back our employee teams, and train them on new coronavirus related procedures. We will have to convince our guests to come back to our theatres again. From beginning to end, to ramp up and open again, that all could take one to four weeks of lead time depending upon the location, and perhaps up to eight weeks or longer to get everything back open.
4. It also Is crucial that we have a line of sight into blockbuster movie titles coming soon. We may open some theatres with previously released popular films, movies that have been shown on DVD’s and on television for months if not years. We can not do so for too long, though, as many of our theatres are not likely to be all that successful merely with older film product. To run a network of theatres as large as AMC and Odeon, we will need new movie releases to be on the horizon. Right now that commences with Warner Brothers’ Tenet (which currently is slated to release July 17) and Disney’s Mulan (which currently is slated to release July 24).
5. And finally, it will take some cooperation from this dreadful horrid virus that has put the entire world on lockdown these past few months. Right now it is only April, and no one, literally no one, really knows for sure what the world will look like in June and July. Will the virus be in some kind of check, such that life can return to some new kind of normal then, and what would that new normal look like? Or will the virus still be running strong then, still giving the world fits and scaring consumers, even as summer starts. The only thing we really know is that 30 days from now and 60 days from now and 90 days from now, we will know more than we know today. No matter how you slice it, these are uncertain times.

Take these five factors together, it seems extremely unlikely that AMC staffs up or gets anything more open than it is now in the month of May. Openings in June and July are possible but not definite. It all will depend on the status of each of the five factors described above. Is it possible that June and July will be our months for the lights of AMC and Odeon to shine brightly once again? Hopefully, yes. But is it possible that our re-opening is delayed >beyond then? If life has taught us all anything in the past couple of months, it is literally that anything is possible.

YOU AND AMC

You are incredibly important to AMC. So, we will continue to brief you, and let you know the latest news as soon as we can.

Until that next communication, be smart, stay healthy, stay safe.

Adam

Adam Aron CEO and President AMC Entertainment

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