Dilution is coming to AMC Entertainment (NYSE: AMC, APE) shareholders. The firm this morning filed a prospectus supplement with the Securities and Exchange Commission for the sale of up to 425.0 million preferred equity units, which currently trade under the symbol “APE”.
The sale of the preferred units is set to occur via an at the market offering, in both on-exchange transactions as well as through negotiated transactions at market prices. The sales are to be conducted via that of Citigroup Global Markets.
Proceeds from the sale are to be used by the company to repay, refinance, redeem or repurchase existing debt, as well as for general corporate purposes.
While a total size of the financing in dollar terms cannot be ascribed due to the nature of the financing, at Friday’s closing price of $3.58 for the firms preferred units, it would translate to a total financing amount of roughly $1.52 billion.
READ: Jim Chanos Plays The Arbitrage Between AMC And APE
And while shareholders of AMC common stock may be quick to quip that this is why they hold AMC and not APE stock, it should be noted that within the second paragraph of the prospectus the company again confirmed that it eventually intends to convert all APE shares to that of AMC shares.
“Subject to the terms described herein, the Preferred Stock and the AMC Preferred Equity Units (by virtue of their interest in the Preferred Stock) will convert into shares of our Class A common stock at the then-applicable conversion rate if we obtain stockholder approval to increase the number of authorized shares of our Class A common stock to a number at least sufficient to permit the full conversion.”
AMC Preferred Equity Units last traded at $3.58 on the NYSE.
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