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AMC Entertainment Shares Plunge as New APE Securities Debut on NYSE – Deadline

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AMC Entertainment’s new APE securities — AMC Preferred Equity Units — opened early today in a chaotic session for large exhibitors with major equities down nearly 40%.

APES had been distributed to AMC shareholders through brokers since this morning. A shareholder gets one of his APEs for each share of common stock he owns. APES — with the same economic value and voting rights as common stock — opened at $6.95. Security was temporarily suspended after it traded to $9.49, according to reports. Having crossed the $10 mark, he is currently trading at $7.37.

AMC is preparing investors with a statement, tweeted today by CEO Adam Aron. “Investors … should expect the stand-alone share price of the common stock to fall logically, at least initially, but the economic return for the investor will be the sum of the common share price and the APE price. said AMC.

When Aron announced the APES earlier this month, he described them as a kind of special dividend, a gift to AMC shareholders. (Monkey is also slang for amateur investors piled on AMC in 2021.)

The company currently has 517 million APEs in issue and its board of directors has authorized issuance of up to 1 billion securities. APES now has a new currency that AMC can use to 1) strengthen its balance sheet, including reducing debt and other liabilities, and 2) invest in “enhancing shareholder value and transformational M&A investment opportunities.” It is good for the company that there is Aron hinted that it might eventually include theaters streamed by Regal.

The new security offers flexibility and “significantly reduces survival risk as we navigate the impacts of the COVID pandemic as we navigate through the recovery and transformation,” AMC said.

The recovery, or lack thereof, of the pandemic is at the forefront and center today as giant chain and Regal’s parent company Cineworld confirmed it may file for Chapter 11 in the US for restructuring. Finding unbearable hefty debt and a drop in ticket sales last week as a glut of new wide releases gave way to a quiet late summer and early fall for big events, plans to do something drastic Cineworld has about $9 billion in debt, much of the debt it acquired in its $3.6 billion acquisition of Regal in 2018. (The British giant is also being asked to pay Canada’s Cineplex about $1 billion for changing its mind after agreeing to buy the company.)

The new weak film slate is one faced by all exhibitors, and the CEOs all admitted in their recent earnings calls. Like Cinemark, Marcus and Imax stocks, AMC stocks were hit by the news of Regal. But analysts who follow the sector see Cineworld’s balance sheet concerns as company-specific.

“In our opinion, the balance sheets of AMC, CNK and MCS are [the other three] Well positioned to push through its weakness, I see no reason for investors to be increasingly concerned. Additionally, given the dynamics of strong attendance and spending per patron over the last 6-12 months, it is an attractive set-up for exhibitors heading into Q4 2022 and a stronger film slate in 2023. can be seen.

APE securities provide AMC with access to significant additional capital. He also sees Regal’s predicament as a potential boon for his AMC.

“While Cineworld’s move to bankruptcy appears to be primarily focused on restructuring its balance sheet, the sale of some assets cannot be ruled out. AMC has already opened theaters within Europe. We believe that AMC could be an interested buyer given that we operate in the U.S. For Regal’s assets in the U.S., we believe AMC may avoid market share restrictions through its acquisition of Leasing. Yes,” said Wold.

Volatility in meme stocks is something Aron will have to manage.AMC will be the poster boy for memes in early 2021. When dogmatic and vocal retail investors poured into stocks to help them rise, crushing short-selling bets on stocks going down. This has completely shifted the shareholder base from institutions to individuals. By flying shares at a critical time during the Covid-19 pandemic, AMC was able to raise cash by selling shares at inflated prices and remaining financially solvent. Since then, Aron’s unusual strategy has been when he can include this unruly group in his decision-making, all while being humorous.