Ah, AMC. Has there been any entertainment brand with stock as volatile and unpredictable as AMC Entertainment’s over the last few years? With the company still struggling to shrug off its ‘memestock’ status and achieve true balance in their balance sheet, we’ve now see Wall Street swinging back into AMC’s favor after their latest capital-raising exercise. Blake & Wang P.A.’s Brandon Blake, our expert entertainment attorney Los Angeles, shares the news.
Shares Up in Pre-Market Trading
In what was announced as an at-the-market equity offering, AMC Entertainment has raised $325.5M in fresh capital, contributing to a noted upswing in pre-market trading last week. This capital was raised mostly through the $8.14 sale of over 40 million shares, with the money destined to pay down existing debt and ‘address current liquidity concerns’. It’s a strategy they’ve used successfully before as they struggle to bring their post-pandemic balance sheet back fully into the black.
This led to a 65c rise in stock price to the $8.89 mark, an 8% rise across the board as of last Thursday.
Demise of the APE
The latest stock sell-off follows the conversion earlier this year of their AMC Preferred Equity Units, or APEs, into common shares. With the impacts of the COVID crisis finally fading, AMC Entertainment still has a high debt load to carry, not helped by the ongoing impacts of the current strike environment. This follows their rise to prominence as a ‘meme’ stock after a bankruptcy scare amid the pandemic fallout.
Additionally, we’ve seen them continue to attempt to fortify their balance sheet with diversification- including a move into selling branded popcorn varieties through a partnership with Walmart.
While AMC remains the largest chain theater in the US currently, with over 7,850 screens, this struggle to pull themselves fully back from the brink of bankruptcy continues to have adverse effects on their stock price. Perhaps with this latest sell-off, we will finally see some much-needed stability return.
