Shares of AMC Entertainment Holdings Inc (NYSE: AMC) opened about 25% down this morning after the cinema chain revealed plans of raising new equity.
Antara Capital to buy its APE units
On Thursday, the Leawood-headquartered firm said it plans on selling its “APE” units at a price of 66 cents (weighted average) to one of its current debt holders – Antara Capital LP. The press release also added:
“Antara will also exchange $100 million principal amount of 2nd Lien Notes due 2026 for approximately 91 million APE units, thereby reducing AMC’s outstanding debt by $100 million.”
That will reduce its annual interest expense by roughly $10 million.
Initially, Antara will buy 60 million of its APE units – and the rest of it will be executed later on. Versus the start of 2022, AMC shares are now down about 85%.
AMC shares down on proposed reverse split
Also on Thursday, its Board of Directors proposed a 1 for 10 reverse stock split. AMC also wants to convert its APE units into common shares that will further dilute its current shareholders.
The movie theatre company is yet to secure approval from its investors for these proposals that are subject to other customary closing conditions as well. According to CEO Adam Aron:
Our liquidity is now significantly enhanced, and balance sheet strengthened. We look forward to a growing box office in 2023 and beyond and AMC continuing to benefit from its unique leadership position in movie theatre industry.
Last month, AMC Entertainment Holdings Inc reported a better-than-expected third quarter that, nonetheless, failed to meaningfully benefit AMC shares.
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