Amc Entertainment Holdings Stock Takes a Hit on 40 Million Share Sale Plan Post Ape Unit Settlement

AMC Entertainment Holdings Stock Takes a Hit on 40 Million Share Sale Plan Post APE Unit Settlement

AMC Entertainment Holdings stock plummeted over 20 percent in early trading Wednesday after the theater operator disclosed its widely anticipated plan to sell new common stock following a legal settlement with investors late last month.

According to a Securities and Exchange Commission filing released today, AMC Entertainment Holdings, Inc. (NYSE: AMC) has announced its intention to sell 40 million new Class A shares. The company plans to allocate the proceeds towards reducing its outstanding debts, estimated at $5.1 billion.

This move follows a pivotal legal settlement on August 11, wherein AMC triumphed in a case against a group of shareholders at the Delaware Chancery Court. These investors had expressed concerns that AMC’s plans to convert special preferred share units — APE units — into common stock would dilute their investments.

AMC secured the right to proceed with the APE unit conversion, which was exchanged on a 1 for 7.5 common share basis, following a reverse 1-for-10 split of common shares on August 24. The APE units are no longer listed.

CEO Adam Aron told investors in a letter dated August 14,

“When AMC can raise much-needed cash, those rooting or betting against AMCI face much more of an uphill climb.”

He added,

“And with the convergence of AMC common shares and APE units, we hope and expect to be able to raise equity capital more efficiently and with less dilution than when the APE units were trading separately at a significant discount to AMC common shares.”

The stock market reacted swiftly to the news, with AMC Entertainment Holdings stock plummeting by 20.23% in early Wednesday trading, now valued at $10.86 per share.

Last month, AMC reported a second-quarter profit of one cent per share, with a 15.6% revenue increase to $1.35 billion, thanks to the blockbuster success of Barbie and Oppenheimer, marking the best box office opening weekend in four years in late July.

In particular, Barbie, a Warner Bros. Discovery (NASDAQ: WBD) film featuring Margot Robbie and Ryan Gosling, has generated an astounding $1.35 billion in global box office receipts since its debut in late July, surpassing Super Mario Bros. Movie as the year’s biggest blockbuster hit, according to Comscore data.