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China’s Dalian Wanda Group has issued a statement regarding its AMC Entertainment, calling speculation about the chain filing for bankruptcy “pure rumors.” This comes after an S&P Global report last week forecasted AMC’s depletion of cash by mid-summer and its potential inability to re-open by June, and as chatter has swirled about a possible Chapter 11 filing.
In a one line announcement on its Chinese website, Wanda said, “Recent online speculation from the media that Wanda’s AMC is filing for bankruptcy is pure rumors.”
AMC has 630 U.S. locations which were all shuttered temporarily in mid-March as the coronavirus outbreak grew. When they will re-open remains a question mark. The world’s largest exhibition circuit is saddled with $4.9B in debt and as of last week was valued at $327.3M.
As Deadline reported last week, distribution and rival exhibition sources wouldn’t be shocked if AMC files for Chapter 11 in the near future, but that’s not necessarily a scarlet letter for the group. Should AMC file for bankruptcy, it can still re-open under Chapter 11 according to sources and that’s because studios and distributors are likely to be deemed by a bankruptcy court as critical vendors.
AMC has furloughed 25K employees, instituted a reduced pay program for general theater managers, placing a hold on discretionary expenditures and making pay/employee cuts at its corporate headquarters in an effort to re-open as soon as it’s safe to do so.
On Tuesday, AMC stock closed at $2.18, up 5.83% on the previous session.
Wanda acquired AMC in 2012 for $2.6B and in 2016, it acquired Legendary Entertainment. However, in 2017 and 2018, its ambitious Chairman Wang Jianlin took a precipitous public tumble. As China cracked down on capital flight, and with Wanda believed to be over-leveraged, Wang sold off billions in assets, saying the company would put the brakes on Hollywood investments. In September of 2018, Wanda reduced its stake in AMC to 38% under a deal that saw AMC take a $600M strategic investment from Silver Lake Capital which was in part used to buy back Class B common shares owned by the Chinese conglomerate.
Wanda’s theaters in China are currently closed amid the coronavirus crisis.