What Exactly are AMC’s New APE Units?

The company will again use the proceeds to repay debt and improve its cash position. In a reverse stock split, the share count drops and the share price rises. A 1-for-10 reverse split like AMC’s should slash the share count to 10% and add a zero to the stock price. Two key initiatives in the restructure full-cycle cryptocurrency exchange development are a reverse stock split and conversion of preferred equity into common stock. Read on to learn the details of these moves and whether they can keep AMC out of bankruptcy going forward. For AMC Entertainment (AMC), the release of its new preferred stock class called APE units has come at a bad time.

1. The real question is why did AMC pay this special dividend in particular and how does it actually function in relation to AMC Entertainment stock.
2. “We will keep you updated as we have more information,” Aron added about the upcoming court injunction hearing.
3. 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.
4. Antara also accepted 91 million APE units as payment for $100 million of AMC’s outstanding debt.
5. APE units rose 9 percent to $1.88 in trading on Tuesday, while AMC stock fell by 72 cents, or around 13 percent, to $4.74, as investors begin to anticipate a possible convergence.

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. 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. Alicia Reese of Wedbush also sees upside, though not as much.

They had the same voting and economic rights as AMC common shares. The stock surge at the time helped the company strengthen its financial position, as executives seized the opportunity to sell shares and repurchase debt. But with stock in AMC having come back down to earth in value, the exhibition giant has been hard-pressed to keep raising fresh cash to run its business. “We will keep you updated as we have more information,” Aron added about the upcoming court injunction hearing. The APE conversion vote will have the effect of eliminating a gap between the value of AMC common shares and its APE preferred dividend, which has hampered efforts to sell stock. These preferred equity units are a workaround, of sorts, and free AMC up to sell additional units of stock as it continues to revive its business after the pandemic.

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The special shareholders meeting aimed to help the mega exhibitor continue selling stock to reduce its high debt load. You may remember our friends at AMC, the theater chain with the pantless CEO, who’ve leaned all the way in on the meme stock thing. Hordes of enthusiastic retail investors maybe rescued AMC from crushing debt. Now AMC is hoping to tap them again to create more shares of the company.

Will AMC stock recover?

This will put its liquidity in a tough spot and could spark a bankruptcy filing. As AMC stock plummets, are its APE units worth their weight? Here’s the rundown on a rival’s potential bankruptcy and how it could impact AMC in the long term. Credit Suisse, Roth Mkm, and Citigroup analysts are less positive. On September 1, Credit Suisse lowered its price target on AMC to $8 from $8.38.

If anything APE units should be sold at a premium over AMC shares which is not the case currently as APE hovers around $6.60 and AMC trades around $9.35. The main shareholder complaint is the dilutive effect of the conversion. The company essentially rolled what was formerly 1 billion shares of APE into the AMC share count. While the reverse split blurs the outcomes, higher share counts reduce EPS and lower the ownership percentage represented by each share. Typically, preferred equity has seniority over common equity with respect to dividends and in bankruptcy payouts.

Acquisitions or expansion efforts could change the company’s outlook significantly, for better or worse. As for the industry, the summer movie season has been busy, https://www.day-trading.info/imax-global-trading-on-the-app-store-2020/ 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.

She recently upgraded AMC from underperform to neutral and set a price target of $19. AMC is screening Swift’s The Eras Tour documentary in theaters and capturing 43% of box-office revenues in the process. In the first day of ticket presales, the concert film sold $26 million—a record in advance ticket sales for AMC. From an investor’s perspective, APE was not a successful stock.

What are APE Units?

Shareholders in AMC Entertainment Holdings have voted to allow the parent of AMC Theatres to convert AMC Preferred Equity Units, or so-called APEs, into the company’s common shares. « With the creation of APEs, AMC is deeply and fundamentally strengthening our company, » Aron said in a separate shareholder letter issued Thursday. Releasing the APEs not only references how some of these investors refer to themselves, but also allows the firm to bypass the need to increase the number of common shares. Aron wrote in a tweet the company’s new APE units will allow it to “raise capital, pay debt,” and more.

Prior to that transaction, AMC had not split its stock, either positively or negatively, since it listed on the NYSE in 2013. Riley thinks that’s possible because AMC can now raise capital to fund expansion or acquisitions. Cineworld, the parent company of Regal Cinemas and the second-largest movie theater circuit in the world, says admission levels are poised to remain low through November of this year.

Now the exhibitor wants to converge the APE units and common shares to stop investors buying the lower-cost APE shares and shorting the higher-cost AMC common shares as part of an arbitrage trade. AMC is approved to issue up to 1 billion APE units with its board able to authorize up to 5 billion. Currently the company has issued just over half of its approved preferred shares with the special dividend. AMC can sell more in order to raise cash or pay down some of its $10 billion in debt and long-term liabilities. As would be expected, AMC issued the new APE units in an effort to raise more money.

AMC on Thursday said it plans to issue a dividend to all common shareholders in the form of preferred shares. In late Dec. 2022, AMC announced it raised $110 million to pay down debt by selling APE units to Antara Capital, LP to reduce the company’s debt load by around $100 million. The vote at the special meeting of shareholders was required to permit a wider conversion of APE units into AMC common shares. Converting APEs into AMC https://www.topforexnews.org/software-development/10-best-front-end-developer-job-descriptions/ common shares had opponents as it will dilute the company’s stock, which effectively will reduce the overall share price. In early 2021, AMC became a popular stock among retail investors after the company appeared close to bankruptcy amid the pandemic fallout at movie theater chains. In August 2022, the company issued a special dividend to investors of one AMC preferred Equity unit, or APE, for each of AMC Class A common stock.