AMC Entertainment Files to Sell Up to 425 Million New APE Shares – Deadline

Giant theater chain AMC Entertainment today filed for sale of up to 425 million AMC Preferred Equity Units (APEs).

They sank a little more early on Monday and then flew higher.

AMC distributed the first batch of APE shares to shareholders in August, which are trading on the NYSE. Each APE unit has the same economic and voting rights as one share of common stock. CEO Adam Aron has called the distribution a gift, but AMC’s big retail shareholders disagree. This vocalist group had previously derailed plans to issue new common stock in AMC, preventing the company from raising cash to pay off a hefty debt of about $5.4 billion. So APE was a workaround. A new currency that AMC can sell to raise new funds without shareholder approval.

“It was a good way to get around investors who wouldn’t let us issue more shares to raise more cash. But investors understand that. Adam Aron did great marketing. But selling it as a gift was a challenge,” says Wedbush Securities analyst Alicia Reese. (Issuing new shares as well as a new APE will dilute the status of current shareholders.)

In retrospect, AMC also missed the window as the APE unit has fallen precipitously since its debut. “If they all [APE] Issue shares quickly – I thought what they were going to do was do it all at once to pay off the debt – [retail] Shareholder-based, they would have had only basic shareholders, but were a debt-free company. She calculated that an immediate sale of 900 million of her new APE units would wipe out all of AMC’s debt.

Today’s filing was a placeholder and AMC did not indicate how many APE units it would sell or when. But Rees said, “In a high-interest-rate environment, paying down debt should be your number one priority. Markets aren’t going to be friendly next year, especially when you have 5.5 billion in debt.”

Love from private investors helped the chain avoid bankruptcy as AMC turned into a skyrocketing meme stock in early 2021 and sold shares at inflated prices. But the decoupling of the stock price and the company’s underlying business outlook that characterizes memetic stocks has baffled even traditional Wall Street analysts, investors, and executives. “Extreme volatility in market prices” for our common stock and APE units “was accompanied by reports of strong and atypical retail investor interest, including on social media and online forums,” the SEC filing said. “We believe volatility and current market prices reflect market and trading dynamics unrelated to our underlying business, macro or industry fundamentals, and we believe these dynamics I don’t know how long it will last.”

“Under these circumstances, we caution you not to invest in AMC preferred stock units unless you are prepared to risk losing all or a substantial portion of your investment.” Volatility is extreme.

AMC noted that the company’s common stock moved from an intraday low of $7.66 on the NYSE on Sept. 23 to a high of $10.39 on Sept. 15. On Sept. 15, he hit a high of $5.69, but “no disclosure of changes in core business during that period.”

APE is up 7.8% at $3.85 late in the morning. Common stock is down 5.3% to $7.56. .

The Company will not use any net proceeds from the sale of APE “for the repayment, refinancing, redemption, or repurchase of the Company’s existing debt (including costs, accrued interest and premiums), and for other general corporate purposes.” increase.