What Exactly are AMC’s New APE Units?

• Forex Trading
• 19 de outubro de 2023

While the two stocks had different tickers, they represented ownership in the same company. The stock dividend ultimately doubled AMC’s share count, just as a 2-for-1 stock split would. They characterize AMC as a value trap, arguing that there’s no fundamental improvement in the business. The company has struggled to generate profits for years, even before the pandemic shuttered movie theaters. The recent capital moves and the surprise $0.01 diluted EPS reported in the second quarter of 2023 may simply be too little, too late for AMC. Although these moves were part of AMC’s plan to avoid bankruptcy, investors have not responded well.

Maybe those investors didn’t want to be further diluted — AMC sold a lot of shares during the pandemic. But APE, the solution, isn’t just a nice marketing ploy to keep retail’s attention. It’s an end run around the investors who voted against more shares. After giving about 500 million shares of APE to investors, AMC can sell 4.5 billion units to the broader market, The Wall Street Journal reports. Unofficially, the distribution of APE shares in 2022 was effectively a 2-for-1 stock split. As noted, the company gave away one APE share for every one AMC share owned.

1. Credit Suisse, Roth Mkm, and Citigroup analysts are less positive.
2. Read on to learn the details of these moves and whether they can keep AMC out of bankruptcy going forward.
3. The company expects to issue a dividend of around 517 million APE units later this month.
4. 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.

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.

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 https://www.forexbox.info/global-asset-allocation/ 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.

AMC plans to issue 517 million shares of preferred stock, under the ticker symbol ‘APE’

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 complete guide to etfinance 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.

What are APE Units?

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.

Will AMC stock recover?

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 https://www.day-trading.info/what-is-master-data-management/ 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.

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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.

The move was intended to rally support from AMC’s meme investor base. Stock splits and reverse stock splits redistribute a company’s value across a greater or fewer number of shares. AMC Entertainment (AMC) has dominated financial headlines for weeks and the good folks of Reddit aren’t to blame. The movie theater company is working through a complex plan to improve its balance sheet and reduce its interest expense burden. See, AMC wanted to sell more shares and was shot down by investors.

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, 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.

These effects cancel each other out, which is why the value of shareholders’ positions and the company’s market cap don’t change. The company expects to issue a dividend of around 517 million APE units later this month. The new class of shares carries the same voting rights as the existing common shares, the company said in a release. The special dividend is a clear effort from the theater company to appeal to retail investors who spend most of their time on r/wallstreetbets and playing Call of Duty. 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.

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.