AMC Plummets, APE Soars As Court Approves Share Conversion Plan

The stock value of AMC Entertainment (NYSE: AMC) took a significant hit on Monday after a recent court ruling greenlit the movie-theater chain’s proposal to convert its preferred equity units, referred to as APEs, into common shares.

AMC’s stock experienced a sharp decline of 35%, reaching $3.43 per share. This decline signals the most substantial drop since early 2021, during the period of intense volatility prompted by the meme-stock trend.

In contrast, the company’s APE units witnessed an 18% surge in value.

Over the weekend, a Delaware court granted approval for the merger between AMC and its preferred shares, which will consolidate all outstanding shares into AMC common stock. Moreover, an upcoming 1-for-10 reverse stock split is scheduled for August 24, as outlined in an SEC filing. This arrangement implies that each investor’s 10 shares will be consolidated into a single share, albeit at an elevated valuation.

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As per the SEC filing, APE shares will cease trading on August 25.

“On Friday, the Delaware Chancery Court ruled that we can now immediately move to implement the proposals that were approved in the shareholder vote of March 14, 2023,” CEO Adam Aron said in a letter.

The AMC stock has exhibited volatility in recent months due to the multi-step conversion process, initially sanctioned by shareholders in March and subsequently suspended in late July. Aron underscored the importance of this conversion, stating it is integral for the company to maintain healthy cash reserves in 2024 and 2025.

“First and foremost, AMC should now be able to raise additional equity capital. We can use this access to equity capital to shore up our cash reserves, pay down debt, invest in growth initiatives to strengthen our operating profitability and pursue transformative merger and acquisition opportunities,” Aron emphasized.

Notably, AMC’s stock had seen an upward trajectory in the past month following the successful opening weekend of “Barbenheimer,” a combined screening of “Barbie” and “Oppenheimer,” which delivered AMC’s most robust single-day performance since pre-pandemic times. The company has been striving to recover since 2020 when theater attendance plummeted due to COVID-19 restrictions.

In its most recent quarter, AMC reported a quarterly revenue of $1.35 billion, surpassing analysts’ expectations of $1.29 billion. The company also outperformed estimates with earnings per share of $0.00, surpassing projections of a loss of $0.04 per share.

While this quarter marked the first instance of AMC not reporting an adjusted loss per share since Q4 2019, it is worth noting that the company’s revenue for the most recent quarter lagged behind the same period in 2019, prior to pandemic disruptions, by approximately $150 million. During this quarter, AMC observed a decline of roughly 30% in attendance compared to the same period in 2019.


Information for this story was found via Edgar, Yahoo Finance, The Wall Street Journal, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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