AMC Entertainment, Inc., plans to issue 517 million shares of preferred stock, under the ticker symbol ‘APE’. This news comes after AMC’s plan to acquire Carmike Cinemas was approved by the Department of Justice on Monday. The newly issued shares will amount to roughly 23% of AMC’s current outstanding shares, and are being issued at $25 per share.
AMC Entertainment found a creative way to increase its share count after last year’s proposal to issue more shares was turned down by investors.
On Thursday, AMC said it would distribute preferred shares as a dividend to all common shareholders. The company applied to list their preferred equity units on the New York Stock Exchange under the symbol APE, as a way of thanking the retail investors who helped save the company from bankruptcy.
Shares of AMC plummeted 6% in extended trading yesterday.
CEO Adam Aron said in a statement that the company would like to reward and recognize its passionate and supportive shareholders both domestically and internationally. for every AMC common stock share the shareholder owns, they will receive one AMC preferred equity unit.”
Later this month, the business intends to distribute a dividend of about 517 million APE units. On August 22, the shares will go on the market. The corporation stated in a release that the new class of shares has the same voting rights as the current common shares.
AMC sold additional stock to raise billions during the pandemic but eventually ran out of shares to sell. Investors rejected the company’s attempts to offer additional stock out of concern for dilution.
AMC would search for a different solution because that is not ideal. AMC will still have about 4.5 billion units left over after offering the 517 million APE units that it could sell to raise money.
In a second shareholder letter sent out on Thursday, Aron stated that “AMC is deeply and fundamentally strengthening our organisation with the development of APEs.” Given the flexibility that APEs will provide us, we may raise money if we need to or if we choose to, which significantly reduces the risk of survival as we continue to work through this pandemic toward recovery and transformation.
Despite generating close to $1.2 billion in sales during the quarter that ended on June 30, AMC reported a net loss of $121.6 million on Thursday.