American movie theater chain operator AMC Entertainment Holdings is selling nine of its cinemas in the Baltic region for $77 million. The decision to offload part of its assets is the company's latest move to further reduce its debts and increase its liquidity.
On Monday, AMC announced that it had signed a definitive agreement with UP Invest for the sale of nine of its cinema locations. UP Invest, controlled by Estonian businessman Margus Linnamäe, has agreed to pay €65 million for the cinemas located in Latvia, Lithuania, and Estonia.
AMC originally acquired the cinemas as part of a deal it made with the Nordic Cinema Group in 2017. Under the new deal, UP Invest has agreed to pay half of the total amount upon signing of the contracts. The rest of the balance will be paid up once the transfer of each of the cinemas is done following regulatory approval.
The sale comes just a few months after AMC launched a debt restructuring plan in July to strengthen its balance amid the economic downturn. Similar to other entertainment-related businesses, AMC suffered massive losses after the coronavirus pandemic forced it to close down its theaters worldwide.
AMC's chief executive officer, Adam Aron, mentioned in a statement the deal it got for the nine cinemas was particularly favorable given the assets' "attractive valuation." He explained that the price UP Invest agreed to pay was about 9.3 times the anticipated 2020 EBITDA (earnings before interest, taxes, depreciation, and amortization) of the assets before the pandemic hit.
Aron assured stakeholders that the company remains positive on its outlook in the second half of the year. He added that attendance levels at the company's recently reopened cinemas have been encouraging, particularly in its close to 300 theaters now open in the United States.
Since it reopened its theaters, AMC has been implementing new cleaning and safety protocols to mitigate the spread of the virus and to protect its customers. Aron stated that the protocols have proven to be very successful in increasing attendance and spending in its theaters. He added that the company is working to establish a line-up of new and entertaining film products in the coming months to drive up attendance over the second half of the year.
