As COVID forced AMC to close all its movie theaters in the spring of 2020, it played hardball with its landlords in order to survive. From a letter to landlords:

“Without revenue from its theatres,” the letter continues, “AMC will cease paying rent and charges under the lease effective as of April 1, 2020.”

Even with rent relief, the company lost $900 million in the first 9 months of the year, per their latest quarterly report. Things are looking a little brighter these days with many theaters reopened and people being vaccinated, but one small matter remains…

AMC owes almost half a billion dollars in back rent to landlords:

Getting through 2022 will require theater attendance to rise and that landlords further delay or reduce outstanding deferred rent owed by AMC, totaling $450 million.

AMC expects to negotiate these payments, but is still looking at a big expense increase. From its latest quarterly report:

commencing in 2021, absent further negotiations with landlords, the Company’s cash expenditures for rent will increase significantly following periods of agreed deferrals

And landlords may be less willing to give AMC a break since it just raised $1.3 billion in additional capital. But having lost $100 million a month last year, plus owing $450 million in back rent, how long will it take AMC to chew through that $1.3 billion? I question whether that cash hoard can last through 2021, especially since studios are giving AMC less time to run each movie exclusively before the studios stream it themselves:

AMC was able to negotiate an exclusivity window with Universal Studios before new movies hit Peacock, owned by Universal’s parent company Comcast. AMC wanted 75 days of exclusivity, they got 17. That’s only one major studio.

However, AMC does have two things on its side: a great management team that even furloughed itself to save money, and a high stock price that could let the company raise more capital.

That said, given the company’s big obligations and increasingly diluted stock, I’ll be cheering for them from the sidelines.

For more on AMC and the Wallstreetbets phenonmenon, check out these posts:

• AMC Stock Is Acting Like COVID Never Happened
• Second Short Squeeze Is On As GameStop Triples in 1 Day
• Palantir Is Losing $100 Million a Month With No End in Sight

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Photo: “The Rent is too Damn High.” by TenSafeFrogs is licensed under CC BY 2.0