Wednesday, August 5, 2020
The drop followed an announcement by the luxury movie theatre company that it was unable to pay a $10 million interest payment to the Teachers' Retirement System of Alabama (TRSA) and the Employees’ Retirement System of Alabama (ERSA) due July 1.
In a letter to investors, iPic (Nasdaq: IPIC) said it has about $204 million in outstanding debts to the retirement systems as of July 25, 2019.
Meanwhile, iPic had just $2.2 million in cash on hand as of last week.
As a result of the turbulence, Alliance Global Partners analyst Brian Kinstlinger downgraded the stock to "neutral" from "buy" and said it would be worthless if the company does go bankrupt.
At its lowest point on Monday, the stock dropped 46% to $1.10 from $2.03. In the past year, the company's stock has dropped 84%.
iPic mentioned the possibility of bankruptcy in its letter to investors.
"There can be no assurance as to when or whether we will be able to access additional funds under our credit facility or restructure our outstanding indebtedness," the letter read. "We may elect to implement a restructuring or a strategic alternative through Chapter 11."
The company adds that if it were to file for bankruptcy to reorganize the company, it could cause the shares of existing common stock to be canceled. That would place current investors at risk of losing all their investment in current shares.
A representative from iPic's investor relations declined to comment.
iPic has 250 full-time and over 2,000 part-time employees. It operates 123 screens across 16 locations in nine states.