AMC Entertainment splits the tank after announcing plans to raise $110 million

AMC Entertainment Holdings said Thursday it will raise $110 million in new equity capital by selling its preferred stock and proposed a reverse stock split, sending the movie chain’s stock down 11%.

Antara Capital, AMC’s current debt holder, APE, will buy the preferred stock at an average price of 66 cents per share.

Antara will also exchange $100 million in debt for approximately 91 million APE units, reducing AMC’s annual interest expense by approximately $10 million.

The company also said it expects to hold a meeting for APE and AMC shareholders to vote on the conversion of APE units into AMC shares and proposed a 1:10 reverse split of AMC shares.

“We believe that simplifying our capital structure is in the best interests of our shareholders, given the ongoing trading discounts we regularly see in APE’s unit price compared to AMC common stock,” said Chief Executive Officer Adam Aron.

In March, Aron said the movie theater chain would pursue more “transformational” deals to capitalize on interest from retail investors after its bet on the troubled gold and silver mine operator.

CEO Adam Aron said the plan to raise $110 million “is in the best interest of our shareholders as we simplify our capital structure.”

APE, which has fallen nearly 90 percent since it began trading in August, rose about 82 percent to $1.24 on Thursday.

In August, AMC announced the APE as a special dividend for shareholders and a means of raising capital in the future.

“They’ve taken on a lot of debt and that’s the only way they can survive,” said Thomas Hayes, chairman and managing director of Great Hill Capital.

“They have to keep raising capital to service all the debt to survive, and that doesn’t look very promising.”

According to Aron, AMC will clear about $180 million in debt in 2022.

At the end of September, AMC’s liabilities were $11.79 billion, which included $5.2 billion in corporate debt. Cash and cash equivalents were $684.6 million, down from $1.59 billion a year ago.

The company, which operates more than 900 theaters worldwide, has a market capitalization of $2.74 billion.


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