Published: April 4, 2023 at 9:31 AM ET
According to B. Riley Securities analyst Eric Wold, AMC’s APE conversion settlement paves the way for a massive equity raising that could bring in up to $16 billion.
The settlement, disclosed in Monday’s filing, follows AMC’s proposed conversion of AMC Preferred Stock Unit APE (APE) of AMC Entertainment Holdings Inc. to common stock, a 10-for-1 reverse stock split and a path to a reverse stock split. is the one that opens the Ability to sell more shares. The move, part of the company’s ongoing battle to get rid of its debt, faced court…
According to B. Riley Securities analyst Eric Wold, AMC’s APE conversion settlement paves the way for a massive equity raising that could bring in up to $16 billion.
The settlement, which was revealed in Monday’s filing, involves AMC Entertainment Holdings Inc.
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AMC Preferred Stock Unit Conversion Proposal
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Or an APE to common stock with a 10-to-1 reverse stock split and the ability to sell more shares.The move, part of the company’s ongoing battle to get rid of debt, faced court proceedings.
Wald said the settlement would allow for a “potentially large” equity raise. “In addition to the approved increase in common stock and the 1/10 reverse stock split, if the conversion of APE units into AMC common stock is permitted, it remains a positive path for the company to raise significant capital. You can see it,” he wrote in a memo released Tuesday.
Related: AMC’s stock plunged 22% after the company agreed to settlement terms, opening up a possible APE conversion
“At the recent trading price of AMC stock (considering aftermarket performance on Monday), this shows potential as high as $16. [billion] With the equity that the company raises,” Wald added.
AMC shares plunged 23.7% before the market opened on Tuesday while APE gained 16.9%. AMC shares rose 2% from his 52-week high to close Monday with a 79.9% gain, according to FactSet data. APEs ended Monday’s session up 0.7%.
Gross principal debt for movie theater companies increased from $5.2 billion at the end of 2021 to $4.9 billion at the end of 2022.
See also AMC Shareholders Approve APE Conversion in ‘Landslide Victory’ But Shares Crash
Last month, AMC shareholders voted in favor of the company’s proposal to convert AMC preferred stock units into common stock in what CEO Adam Aron described as a “landslide victory.”
“Given the overwhelming shareholder support, we have found it difficult for a judge to rule against the validity of this vote, which is debatable with the announcement of the binding settlement.” It seems,” Wald wrote. “While maintaining a neutral rating and $4.50, [price target] We expect APE and AMC share prices to converge until final approvals are received and the conversion takes place. ”
AMC claims to be the world’s largest cinema company, with approximately 950 theaters and 10,500 screens worldwide.
Related: AMC is “very well positioned” for 2023, said Wedbush.
Over the past two years, AMC has been on a roller coaster ride, evolving from bewildered pandemic victim to meme stock phenomenon. AMC’s stock rises 25.6% in his 2023, outperforming the S&P 500
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It was up 7.4% and APE was up 5%.
Of the eight analysts surveyed by FactSet, three have AMC hold ratings and five have sell ratings.
Additional reporting by Claudia Assis.
