AMC Entertainment's Zombie Year

AMC Entertainment Holdings, Inc. reported approximately $4.3 billion in revenue for the trailing twelve months ending September 2024. It reported approximately $5.9 billion in total debt obligations. It reported approximately $760 million in cash and cash equivalents. It reported an operating loss of approximately $110 million for the most recent quarter.

By any ordinary balance-sheet reading, AMC is insolvent. It has been insolvent, in this specific sense, for most of the last four years. It has also, across that period, continued operating its 900-plus North American theatre locations, continued making debt payments, continued employing approximately 25,000 people, and continued, improbably, raising additional capital from retail investors when required.

AMC is the most interesting operational story in the American exhibition business. I want to try to describe how the specific structural situation has held together, and what is likely to happen over the next eighteen months.

The short version of the balance sheet

AMC entered 2020 with approximately $5 billion in debt, much of which had been accumulated during the 2016 acquisition of the UK-based Odeon Cinemas group. The company went through the pandemic essentially closed, with theatrical attendance collapsing to approximately zero for most of 2020 and well below pre-pandemic levels through 2021.

Under normal bankruptcy conditions, AMC would almost certainly have filed for Chapter 11 protection in 2020 or 2021. It did not. The specific reason it did not is that AMC became, in January 2021, the subject of a retail-investor trading campaign on Reddit and social-media platforms that drove its share price from approximately $2 to approximately $70 across a few trading sessions.

The trading campaign did not meaningfully change AMC’s operating performance. What it did do was give the company an unprecedented window in which to raise equity capital from retail investors willing to purchase new shares at the inflated prices. AMC’s chief executive Adam Aron executed this window aggressively, issuing approximately $2.3 billion in new equity across 2021 and converting a substantial portion of the company’s debt into equity through negotiated agreements.

What the capital raised bought

The 2021-2022 capital raises bought AMC specific time. The company used the funds to:

• Refinance or extend the maturity on approximately $1.5 billion in near-term debt obligations
• Invest in specific operational upgrades (premium large-format screens, reserved seating, concession-stand upgrades)
• Weather the continued below-pre-pandemic attendance of 2022 and 2023
• Maintain operational continuity at its 900-plus locations

What it did not buy was structural profitability. AMC’s operating economics, at post-pandemic attendance levels, do not support the specific fixed-cost structure the chain has built. Attendance has recovered from the 2020-2021 trough but remains approximately 25 to 30% below the 2019 peak. The specific fixed costs of operating large multiplex theatres (rent, utilities, labour, projection equipment maintenance) do not scale proportionally with attendance. AMC’s per-screen economics are structurally worse in 2024 than they were in 2019.

The Aron strategy

Adam Aron’s strategic framing for AMC has been that the company is a specifically durable brand with a specific audience loyalty that, combined with continued financial engineering, can survive the current attendance shortfall until theatrical attendance recovers or operating efficiencies can be extracted.

The strategy has, across four years, worked to the extent that AMC has not filed for bankruptcy. It has not, on the balance-sheet evidence, fully succeeded: the company’s total debt load has not meaningfully decreased, operating losses continue, and the specific retail-investor-equity-raise mechanism that funded the 2021-2022 stabilisation is no longer reliably available.

The APE preferred-share programme of 2022 and 2023, which was structured to allow additional equity raises without triggering specific shareholder-approval requirements, was the most recent major financial-engineering initiative. It generated roughly $1 billion in new capital before being unwound in late 2023. The specific legal mechanisms for continuing this pattern are now more constrained than they were.

What 2025 looks like

AMC faces specific debt maturities in 2025, 2026, and 2027 totalling approximately $1.8 billion. These maturities will have to be refinanced, extended, or paid. The company’s current cash position ($760 million) is not sufficient to pay the full maturity schedule. Refinancing at current interest rates (roughly 10% for AMC-equivalent borrowers) is specifically expensive.

The most likely 2025 scenarios:

Scenario A: Continued refinancing. AMC successfully refinances its maturing debt at elevated rates, continues operating at current attendance levels, and defers the structural-solvency question for another two to three years. This requires continued cooperation from existing creditors and willingness of new creditors to refinance at aggressive terms.

Scenario B: Strategic restructuring. AMC enters a specific restructuring process that reduces debt through negotiated write-downs, sells specific theatre locations, or combines with another exhibition chain. This would likely require a pre-packaged bankruptcy filing or an equivalent mechanism.

Scenario C: Full bankruptcy filing. AMC files for Chapter 11 protection, restructures debt through the bankruptcy process, and emerges as a smaller, lower-debt company. This would likely involve closures of specific underperforming locations and significant equity dilution for existing shareholders.

What the exhibition industry needs AMC to do

The broader American exhibition industry is structurally dependent on AMC’s continued operation, at least in the near term. AMC operates approximately 21% of American movie screens. If AMC were to rapidly close a significant fraction of its locations, the industry-wide screen count would contract, which would further reduce theatrical-release viability for the mid-budget films that are already struggling.

The outcome that serves the broader industry is Scenario B: a managed restructuring that reduces AMC’s debt load without rapidly contracting its operating footprint. Whether the specific negotiating conditions exist to produce this outcome is unclear.

The outcome that serves AMC’s retail shareholders (who, based on 2021 trading and subsequent share purchases, have paid billions of dollars at prices the share has not returned to) is specifically unclear in all three scenarios. In Scenario A, dilution continues. In Scenarios B and C, existing equity is largely or fully wiped out.

The honest assessment

AMC is a specifically complicated asset. It is, simultaneously, the largest exhibition chain in North America, a zombie company that has been operationally insolvent for years, a surprisingly-effective financial-engineering machine, and a specific cautionary story about how retail-investor enthusiasm can sustain the unsustainable.

Whether the company is still operating at the scale of its current footprint in 2027 depends on decisions that will be made over the next eighteen months. I would not bet either way. The sustained implausibility of AMC’s continued existence is, at this point, the specific structural feature worth paying attention to.