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AMC Entertainment Files To Sell 425 Million Shares

Due to a sour market & investor backlash, AMC Entertainment filed to sell up to 425 million preferred shares.

AMC distributed its first batch of APE shares in August. Each APE unit is equal to a common share. Retail investors didn’t like CEO Adam Aron’s description of the distribution as a gift. 

This vocal group blocked AMC from issuing new common stock, preventing the company from raising cash to pay down its $5.4 billion debt. 

APEs were a workaround; they were a new currency AMC could sell.

AMC didn’t say how many APE units they’d sell or when. Repaying debt should be a top priority in a high-interest environment. 

It’s going to be tough for the market next year. It’s especially bad with $5.55 billion in debt.

Here is what the article states –

“It was a nice way to get around their investors, who weren’t going to let them issue more shares to raise more cash. But investors understand that. Adam Aron does a great job marketing to them, but it was tough sell to sell that as gift,” says analyst Alicia Reese of Wedbush Securities. (Issuing new shares, as well as new APEs, dilutes the position of current stockholders.)

In hindsight, AMC also missed a window because APE units are trading sharply lower since they debuted. “If they had just issued all the [APE] shares right away – what I thought they would do, all of it at once, to repay debt — it would have rid them of their [retail] shareholder base and they would have had fundamental holders only, but a debt free company.” She calculated that selling 900 million new APE units immediately would have wiped out AMC’s entire debt load.

Read the full story here

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