AMC Theaters May Never Reopen Due to Credit Score Decline

According to The Wrap, AMC Entertainment's credit rating has gone down to CCC- from B, which takes the company from "highly speculative" to "Default imminent, with little prospect for recovery."

The company experienced this decline after all of its theaters were forced to close, and film releases were pushed back, due to the current health crisis.

However, the company was in debt even before the crisis. The company reported a $5 billion-plus deficit at the end of 2019 and losses of $149 million for the year.

"We expect AMC Entertainment Holdings Inc.'s (AMC) theaters will remain closed beyond June due to the impact of the global coronavirus pandemic," S&P analysts wrote in a note on Thursday. "We do not believe AMC has sufficient sources of liquidity to cover its expected negative cash flows past mid-summer."

AMC furloughed 600 corporate employees last week, including CEO Adam Aron.

"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.

Read more on The Wrap.