Debt-laden cinemas are facing a difficult task in the age of streaming, but they’re hoping that box office success stories like Matt Damon and Ben Affleck’s Air can turn the tide. AMC Entertainment, the world’s largest theater chain, has managed to stay afloat, but the firm has had to resort to measures like tapping into its stock popularity among retail traders and accepting loans from hedge funds.
In Europe, real estate companies are now facing a crisis as their high debt loads and stock prices have caused an alarming amount of debt securities to register as being junk. Cineworld is a case in point, as the theater operator announced this week a plan to raise $2.26 billion through a restructuring that is set to reduce its total debt by double. The lenders and soon-to-be-owners are also looking to sell theaters outside the UK and the US, with private equity heavyweight Elliott showing interest.
Meanwhile, Virgin Orbit – which is tied to billionaire Richard Branson – filed for bankruptcy after a satellite launch failed in January. The company had been hoping for a sale but the cash crunch and negative publicity from the failed launch made it difficult to identify a buyer. Virgin Investments was able to pump in $70.9 million to keep the pared-back operation running while seeking a sale.
Bed Bath & Beyond is also facing a ticking time clock: the retailer only has three weeks to raise an additional $300 million or else risk a bankruptcy filing. Without the support of the daytraders who pushed its stocks prices last year, the retailer is fighting an uphill battle.
At the end of the day, box office success is key to the future of cinema theaters, and thankfully Apple and Amazon have shown their faith in the industry by funding new productions. Martin Scorsese’s Killers of the Flower Moon and Ridley Scott’s Napoleon are both set for the big screen in the fall. Phil Clapp, chief executive at the UK Cinema Association, believes that UK cinema audiences will likely return to 2019 levels in the next year or two.
Virgin Orbit is a company owned and operated by billionaire entrepreneur Richard Branson. The company is known for its “launch system”, which involves a rocket being deployed from underneath the wing of a modified Boeing 747. After a failed satellite launch in January 2021, the company had to lay off 671 employees and filed for bankruptcy in Delaware. Richard Branson’s Virgin Investments committed to providing additional capital to keep the pared-back operations running while seeking a buyer.
Adam Aron is the CEO of AMC Entertainment, the world’s largest theater chain. Since the onset of the pandemic, Aron has worked tirelessly to keep the chain afloat, resorting to measures like accepting loans from hedge funds, tapping into the popularity of its stock with retail traders and figuring out ways to reduce debt. While AMC just narrowly avoided bankruptcy, the future remains unclear with stock prices and short-term investments at an all-time low. Adam Aron will have to zig while others zag in order to move the needle and bring the company out of this difficult time.
