The domestic box office is set to sink for two and a half months due to the lack of a blockbuster, but AMC Entertainment shares continue to roll.
Following Thursday’s announcement that the world’s leading exhibitor was granting APE investors one AMC preferred share for each AMC Class A common share, AMC’s stock price jumped 31% on Friday from $16.97 at $22.18. Well, this morning they jumped another 14%, opening at $24.06 and hitting a high of $27.50. At the time of this article’s publication, AMC shares were trading at $25.02.
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The preferred shares will be issued to common stockholders of AMC on the August 19 dividend date and will trade on the New York Stock Exchange under the symbol APE.
While the idea was that retail investors no longer wanted to see stock dilution, AMC’s APE stock maneuver will give the exhibitor more financial flexibility. The new preferred stock is like having another stock and AMC will be able to enter into transactions and possibly pay off its debt.
“While no one’s crystal ball can accurately predict stock market fluctuations or volatility, the economic interest our shareholders will have in both stocks and
APEs will be in a company that we believe is considerably stronger than AMC is now before this announcement is made this afternoon,” AMC CEO Adam Aron said on the call. to Thursday’s second-quarter results.
“With the creation of APEs, AMC deeply and fundamentally strengthens our business. We already have shareholder approval in hand so that our Board of Directors can decide that we can issue more APEs in the future beyond those exiting with this initial dividend. Given the flexibility the ability to issue more APEs will give us, we believe we would easily be able to fundraise if we choose to, which greatly reduces any risk of survival as we continue to spawn a path through this pandemic towards recovery and transformation. , rather than having to worry about our survival, the flexibility we have from EPAs can instead allow us to continue our efforts to try instead of AMC to thrive and soar,” added Aron.
He added on Thursday: “I act and think like a shareholder, because I too am a shareholder and a big guy in that. At the current AMC stock price I now own about $15 million worth of AMC stock and also counting my previously granted but unvested stock assuming they vest at what are called levels acquisition targets, I have over $50 million of economic interest in AMC. It’s pretty obvious, but it’s a powerful incentive for me to do what’s right for all of our shareholders.
AMC’s second-quarter sales increased on the back of a successful summer fueled by Top Gun: Maverick to $1.16 billion from $444.7 million in the same quarter last year. The exhibitor’s net loss fell from $344 million in the second quarter of 2021 to $121.6 million.
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