AMC jumps on $230m stock sale
CEO Adam Aron tells “naysayers” to “watch out”
AMC Entertainment jumped again at the start of the week’s trading, having announced the sale of 8.5 million shares to the investment firm Mudrick Capital for $230.5m. At $27.12 a share, the deal represents a 3.8% premium on Friday’s closing price of $26.12.
The sale comes after a week in which the cinema conglomerate’s share price more than doubled as investors and traders once again flooded to squeeze heavily shorted “meme stock”.
CEO Adam Aron stated that the new agreement will enable the company “to be aggressive in going after the most valuable theatre assets” and will help “other strategic investments” and AMC’s ability to “pursue deleveraging opportunities”.
Taking to Twitter, Aron denied that the latest raising of equity capital represented a “mindless dilution” of the company’s shares, describing it rather as a “very smart raising of cash so that we can grow this company… to many of you on Twitter, to grow YOUR company”.
CEO challenges short-sellers
Delivering a challenge to the short-sellers who are estimated to have lost around $1.2bn in last week’s squeeze, according to data firm S3 Partners, Aron laid down the gauntlet, stating:
“Watch out naysayers, $AMC is going to play on offense again. Here we come!”
What is your sentiment on AMC?
This courting of the Reddit crowd and conscious aping of their jokingly abrasive language was seemingly successful in offsetting any anxiety over share dilution. By mid-morning, AMC traded up 13% at $29.54, having started the year at $2.
The company’s market capitalisation of over $13.3bn is more than three times higher than its pre-pandemic peak. Although it has enjoyed this year’s surge, the company remains burdened with over $5bn in debt and owes significant amounts in unpaid rent.
Furthermore, although locations are re-opening around the world, there is growing concern that the lockdowns have fundamentally changed people’s viewing habits, accelerating the shift from cinemas to streaming.
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