AMC Postpones Theater Openings Again Following Movie Delays

AMC Entertainment Holdings Inc. (AMC) has announced that they have delayed their movie theater re-openings again in light of the COVID-19 pandemic.

The theater chain stated that it plans to reopen in mid to late August, pushing back its July reopening. In a July 23 statement, the company said the postponement “reflects currently expected release dates for much-anticipated blockbusters like Warner Bros.’ Tenet and Disney’s (DIS) Mulan, as well as release dates for several other new movies coming to AMC’s big screens.”

Last week, Warner Bros announced that it was delaying its movie Tenet which was then followed by Disney, saying that it was delaying Mulan indefinitely.

A Disney spokesperson said to Variety on July 23, “Over the last few months, its become clear that nothing can be set in stone when it comes to how we release films during this global health crisis.” The spokesperson added, “Today, that means pausing our release plans for Mulan as we assess how we can most effectively bring this film to audiences around the world.”

Warner Bros. said that it would employ a flexible rollout of Tenet to overseas theaters in conjunction with some theaters reopening internationally.

On July 20, Warner Bros. Chairman Toby Emmerich said, “Our goals throughout this process have been to ensure the highest odds of success for our films while also being ready to support our theater partners with new content as soon as they could safely reopen.” He added, “We are not treating ‘Tenet’ like a traditional global day-and-date release, and our upcoming marketing and distribution plans will reflect that.”

Last month, AMC pushed back its mid-July reopening to July 30 after the impact of the pandemic. AMC planned to open 450 locations on July 30, followed by 150 more in August. The reopening was to coincide with the August releases of Disney’s Mulan and Warner Brothers’ Tenet. However, last week, both studios stated that they would be delaying the releases of both movies. The movies were anticipated to be the main blockbuster draws for AMC this summer.

In light of AMC’s shuttered theaters the company tried to avoid a default by making a credit agreement with its lenders. On July 23, its lenders reversed their position on the deal, saying that AMC failed to adequately respond to questions about the permissibility of the agreement and planned debt swap with private equity firm Silver Lake. Since then, Apollo Global Management Inc. and other top lenders have stepped up with counteroffers to dissuade AMC Entertainment Holdings Inc from moving forward with the Silver Lake debt restructuring offer.

MKM analyst Eric Handler said on July 23 regarding the delays, “We’re in a big holding pattern right now. The industry is at the mercy of the municipalities of the biggest U.S. markets. The problem is in a number of markets, there are rising levels of Covid-19 cases.” He added, “It would be surprising to see theaters able to reopen nationwide before September, at the earliest.” Since May 27, the analyst has maintained a Hold rating on AMC and a price target of $5, which implies 25% upside potential.

AMC’s stock is down 45% year-to-date with a Hold analyst consensus that breaks down into 1 Buy rating versus 6 Hold ratings and 2 Sell ratings. The $4.43 average price target suggests 11% upside potential for the shares in the coming 12 months. (See AMC’s stock analysis on TipRanks).

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