AMC’s new ‘APE’ units are a meme-friendly way to raise cash fast

AMC announced plans to reverse split its stock and convert the APE shares in December 2022. The company, needing shareholder approval for both initiatives, scheduled the shareholder vote for March 2023. The transaction doesn’t change the company’s value or the value of shareholder positions. Aron wrote in a tweet the company’s new APE units will allow it to “raise capital, pay debt,” and more. That could potentially be enough to keep it afloat while competitors tease bankruptcy.

The short of it, is that AMC has seen its ability to issue more shares blocked by shareholders. Back in July 2021, the company had to backtrack on a plan to issue 25 million shares after shareholders caused an uproar on the potential dilution. The discussion ended with CEO Adam Aron commenting on Twitter that they would be cancelling the vote on more shares, along with any such dilution requests for the remainder of 2021. The preferred Equity stock will be issued to AMC common shareholders on the dividend date of Aug. 19, and be listed on the New York Stock Exchange under the symbol APE.

1. Plans are not recommendations of a Plan overall or its individual holdings or default allocations.
2. While AMC remains a cause célèbre for a vocal community of individual investors, the company’s financial health is a cause for concern, according to data from RapidRatings, a company that assesses the finances of public and private companies.
3. In the second quarter, the theater chain reported total revenue of $1.2 billion, compared to $444.7 million in the year earlier quarter.
4. Maybe those investors didn’t want to be further diluted — AMC sold a lot of shares during the pandemic.

Another key aspect of the preferred units is that they do not require the consent of holders to issue additional units. Just ahead of earnings Thursday, the company announced it would issue a special dividend to investors of one AMC preferred Equity unit for each of AMC Class A common stock outstanding at the close of business on Aug. 15. The company has applied to list these units on the New York Stock Exchange under the symbol “APE,” in reference to the group of investors who have helped revive the stock, starting Aug. 22.

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“To the naysayers, who foolishly have been predicting a secular decline of theatrical exhibition, well, all I can say is you’ve seen my feisty hashtags on Twitter. But the AMC Theatres head warned of a box office slowdown for Hollywood summer releases at the local multiplex in the current quarter. The domestic box office is about to go into a funk for two-and-half months due to the lack of tentpole product, but shares of AMC Entertainment keep on trucking.

AMC on Thursday said it plans to issue a dividend to all common shareholders in the form of preferred shares. As would be expected, AMC issued the new APE units in an effort to raise more money. The reason it didn’t just issue more common shares is that the company would have to get approval from its shareholders, which shareholders already shot down. Instead, the firm found a workaround to sell billions of dollars worth of shares without needing shareholder approval in an effort to capitalize on the extreme hype AMC has received from meme investors. This is where the comment on “a currency that can be used in the future to strengthen our balance sheet,” comes into play. While the company has been stopped from issuing common shares, shareholders might be more welcome to dilution in APE shares, thereby creating the ability for the company to issue shares in exchange for cash coming in the door.

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Consistent with AMC’s reverse split, each share of APE was converted into 0.1 shares of AMC. AMC Entertainment Holdings Inc. took Wall Street by surprise with the announcement of its “APE” special dividend after market close on Thursday. Both stocks could trade at the same value on APE’s NYSE debut but that will probably change quickly depending on market conditions. Helpful articles on different dividend investing options and how to best save, invest, and spend your hard-earned money. Build conviction from in-depth coverage of the best dividend stocks.

Typically, preferred equity has seniority over common equity with respect to dividends and in bankruptcy payouts. They had the same voting and economic rights as AMC common shares. In a stock split, the share count rises and the share price falls. A 2-for-1 split, for example, doubles the share count and halves the share price. These effects cancel each other out, which is why the value of shareholders’ positions and the company’s market cap don’t change. Two key initiatives in the restructure are a reverse stock split and conversion of preferred equity into common stock.

Adam Aron, chief executive officer of the world’s largest cinema chain, said the new financial instrument would be akin to a stock split. AMC could issue more of the preferred shares, which when converted to AMC stock would then dilute existing holders. The theater chain’s new preferred share class — called “APE” units — begin trading on Monday after being distributed to shareholders as a dividend last week. AMC’s preferred equity dividend, aka APE, has been automatically distributed to existing shareholders. According to Public.com, “All [AMC] positions purchased before market close on Aug. 19 will be eligible to receive the [APE] dividend.

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You must be a shareholder on or before the next ex-dividend date to receive the upcoming dividend. Aron also discussed on the call the company’s recent $28 million stake in mining company Hycroft Mining, which due to “market price volatility” impacted the company’s earnings as AMC wrote down the value of the investment by nearly $10 million. While AMC pulled in nearly $1.2 billion in revenue during the quarter ended June 30, the company posted a net loss of $121.6 million, according to its second-quarter results Thursday.

She recently upgraded AMC from underperform to neutral and set a price target of $19. The bulls argue that AMC’s capital restructuring moves have improved the company’s fundamentals and set the stage for growth. They also cite improving industry conditions, touting the summer box-office success of Barbie and Oppenheimer. The company has faced unsubstantiated internet conspiracy theories activtrades reviews that there are millions of synthetic AMC shares in circulation, as well as calls for a share recount, according to a report in The Wall Street Journal. AMC currently has approximately $5.5 billion in outstanding debt, according to Hickey. “We suspect management is targeting leverage at 3x – 4x AEBITDA [adjusted earnings before interest, taxes, deprecation and amortization].

AMC Entertainment has embarked on a meme-friendly experiment to give a token reward to its retail investor base while also creating a backdoor way to raise more cash down the line. Shares of the meme-stock darling, which skyrocketed to a high of $72.62 on June 2, 2021, have fallen 29.7% this year. AMC’s stock closed up 2.47% canadian forex brokers at $18.66 on Thursday, well below its 52-week high of $52.79. AMC’s second-quarter sales were $1.166 billion, compared with $444.7 million in the same period last year. Analysts surveyed by FactSet were looking for sales of $1.168 billion and a net loss of 31 cents, or a net loss of 23 cents a share on an adjusted basis.

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The company previously launched exclusive perks for investors like free concessions and NFTs, while Aron is active on Twitter engaging with the dedicated community of retail shareholders. He’s pretty extra there too; Aron tried to get #TodayWePounce trending last night. In the second quarter, the theater chain reported total revenue of $1.2 billion, dowmarkets compared to $444.7 million in the year earlier quarter. It reported a net loss of $121.6 million compared to a net loss of $344.0 million a year ago. The extra cash could be used to fund acquisitions of other theaters, pay down debt or even push into unrelated businesses, like AMC’s 2021 purchase of a large stake in a gold mining company.

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Speaking during a conference call to discuss the results, Aron said that AMC has the flexibility to issue more “Apes” in the future. As for the industry, the summer movie season has been busy, but Hollywood writers and actors are on strike. The strike ensures a gap in content production, which will affect movie ticket sales in the months ahead. Importantly, APEs were also convertible to AMC shares on a 1-to-1 basis. In the new filing, the special-purpose acquisition corporation, or SPAC, disclosed new lawsuits that seek to block the merger, as well as changes to its bylaws that specify that any complaints brought against it be directed to the U.S. Speaking during a conference call to discuss the results, CEO Aron said that AMC has the flexibility to issue more APEs in the future.

He also completed several online classes taught by the Wharton Business School at the University of Pennsylvania. Check this page frequently because I will update it once I receive more info on the APE dividend. For example, if AMC stock trades at $20 then APE will be worth 50% of AMC’s value, which is $10.