AMC Entertainment Holdings Inc. is selling another $110 million in stock, adding to a total that has already surpassed $2 billion since the theater chain got sucked into the meme stock madness and the stock’s total market cap approaches.
Shares of AMC AMC, -7.36%, fell as much as 22% on Thursday, hitting its lowest daily price since March 2021 after the company announced plans for its latest equity raise. Executives also said they hoped to hold a shareholder vote on a 10-for-1 reverse split of AMC’s common stock, as well as a proposal to increase the allowable number of AMC common shares to allow for the conversion of AMC’s preferred stock units — or APEs — into APE, +75.18%, a reference to the nickname for retailers in the meme stock universe – in common stocks.
The price of AMC’s APE units rose 75.2% to $1.20 on Thursday. AMC shares closed down 7.4% at $4.91.
Even before the $110 million capital raise announced on Thursday, AMC had since early 2021 and the dawn of the meme stock era that cinema chain GameStop Corp. GME launched, sold $2.04 billion worth of shares, -3.65% and others into the stratosphere.
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This total excludes $159.1 million in stock sales that occurred in the fourth quarter of 2020 before stocks started rising in January 2021. Including the sales with the others that have closed since early 2021 — $1.611 billion in common share offerings and $425 million in convertible shares — and adding the number from Thursday’s announcement would bring the total even closer to that total market capitalization of AMC. The company’s market capitalization at the close on Thursday was $2.56 billion, according to Dow Jones Market Data.
AMC is raising the $110 million by selling millions of APE units to Antara Capital, which is also a holder of AMC debt. Antara will also swap $100 million of debt maturing in 2026 for approximately 90 million APE units. That swap, AMC said, would reduce AMC’s outstanding debt by $100 million.
Managing Director Adam Aaron said on Twitter that the move put the theater chain “in a much stronger liquidity position”.
Aron has been trying to find ways to increase AMC’s stock count and sell more shares — a move the company resorted to after pandemic-related shutdowns left the cinema industry on life support. After investors balked at calls to increase the number of shares allowed over the past year, Aron introduced the APEs to continue selling shares without increasing the number of shares.
Now investors are being asked to vote to allow AMC’s board to increase the number of shares so that APEs can be converted into ordinary shares. They will also vote on whether to allow AMC to perform a 10-for-1 reverse stock split and whether to give the company the right to sell more shares rather than just APEs.
“Additionally, APEs worked exactly as intended to allow us to raise needed cash, repurchase debt and explore mergers and acquisitions,” Aron continued on Twitter. “But a huge discount in the APE market price versus common stock needs to be addressed. We will conduct a shareholder vote. It is time to convert APE Preferred to AMC Common to eliminate this discount.”
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He added that “a company as respected as AMC should not allow Wall Streeters who want to harm us to push us into being a ‘penny stock.’ So, in the shareholder vote, you can also consider a 1:10 reverse stock split. Simple arithmetic, if approved, the number of shares goes down, so the share price goes up.”
So far this year, AMC stock is down 82%. The company has not reported a quarterly profit since the start of the COVID-19 pandemic and has reported cumulative net losses of more than $6.5 billion since the beginning of 2020.
Analysts tracked by FactSet, on average, expect AMC’s fourth-quarter revenue to hit $1.21 billion, its highest level since the pandemic began. But they’re still forecasting a loss of around $124 million over that period.