AMC was one of the first theater chains to shut down due to the pandemic, in an effort to protect both its staff and its potential customers. Initially the company unveiled plans to undersell its theaters on purpose to encourage social distancing, but soon enough it decided that wasn’t enough and closed completely.
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Now, the S&P Global has downgraded the theater company’s credit rating, stating that it believes that the chain’s “Default imminent, with little prospect for recovery.” This is due in part to the S&P’s belief that the theater chain would have to keep its doors shut until June or later. The large number of films delayed to 2021 would likely also hurt AMC’s attempt to recover from the time it was shut down.
Unfortunately, the coronavirus shows no signs of lightening up anytime soon, with some states extending shelter-in-place orders through the start of May, with the potential to extend further as needed. There is still some hope for AMC, though. S&P Global noted that if the theater can acquire new liquidity, it would consider raising its credit rating, as the group would have more faith in the theater’s ability to rebound.
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