(WIFR) -- S&P Global on Thursday downgraded its credit rating for AMC Entertainment to CCC- from B, which takes the company from “Highly speculative” to “Default imminent, with little prospect for recovery.”
The nation’s largest theater chain had been forced to close as part of a response to the coronavirus pandemic. The company, was already facing a deficit of more than $5 billion at the end of 2019 and losses of $149 million.
“We expect AMC Entertainment Holdings Inc.’s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic. We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer, and we believe the company will likely breach its 6x net senior secured leverage covenant when tested on Sept. 30, 2020, absent a waiver from its lenders," analysts said regarding the struggling theater group.
According to The Wrap, AMC furloughed about 600 employees last week, including its CEO. This is something that many corporations are having to do in the midst of the COVID-19 pandemic.
"Even after significantly lowering its fixed costs and capital spending requirements, we only expect the company's liquidity sources to last through mid-summer and are revising our assessment of AMC's liquidity to weak" analysts wrote.
AMC Theater Group has theater locations in Machensey Park and Rockford in the Stateline with several locations in Chicagoland and Southern Wisconsin.