After investors rejected a plan to issue new shares last year, AMC Entertainment appears to have found a novel way to increase its share count and raise money.
AMC said on Thursday that it would distribute preferred shares as a dividend to all common shareholders. The firm has applied to list these preferred stock units on the New York Stock Exchange with the ticker code “APE,” in honor of the small-time investors, sometimes known as “apes,” who helped save the biggest movie theater chain in the world from going bankrupt in early 2021.
AMC’s stock decreased by about 6% during Thursday’s extended trading.
CEO Adam Aron said in a statement, “Today we are honoring and recognizing our enthusiastic and supportive shareholders, both to our stockholders in the U.S. and globally.” “Shareholders shall be entitled to receive one AMC Preferred Equity unit for each share of AMC Common Stock issued by the Company.”
Later this month, the company 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.
These preferred equity units are sort of loophole that allows AMC to sell more shares of stock as it works to rebuild its company following the pandemic. 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 organization 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.