Shares of AMC Entertainment Holdings Inc. fell more than 10% in extended trading on Thursday after the company announced a special dividend in the form of “Ape” preferred stock.
The dividend marks the latest move in a battle over stock issues. AMC Entertainment Holdings Inc. AMC,
has turned to the special dividend after being unable to get shareholder approval to issue more common shares, according to the Wall Street Journal.
The special dividend of one AMC preferred stock unit will be issued for each share of AMC Class A common stock with a par value of $0.01 per share outstanding at the close of business on August 15th. The special dividend is expected to be paid at the close of trading on August 19th. AMC has applied to list its AMC Preferred Equity Units on the New York Stock Exchange under the symbol “APE” effective August 22. The symbol is a nod to the investors who turned the company into a meme tribe, who often refer to themselves as “monkeys” or “monkey nation.”
“This new AMC Preferred Equity gives AMC currency that can be used in the future to strengthen our balance sheet, including by paying down debt or raising fresh equity,” said Adam Aron, AMC’s chief executive, in a statement. “As a result, this dramatically reduces the near-term risk of survival for AMC as we continue to work through this pandemic.”
AMC will pay an APE dividend for each of its 516,820,595 shares outstanding, according to Aron. “The issuance of AMC Preferred Equity tradable units only to our shareholders clarifies who is part of our current shareholder base,” he said in the statement. According to the Wall Street Journal, the company has faced unsubstantiated internet conspiracy theories that millions of synthetic AMC shares are floating around and calls for a stock recount.
The company that issued an I own AMC NFT in January will also issue an I own APE NFT to shareholders.
During a conference call to discuss the results, Aron said AMC has the flexibility to issue more “Apes” in the future.
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“I think all of that makes us enormous, and I mean enormously stronger,” he added. The CEO, who called AMC’s critics “naysayers” and “doomsayers” during the call, said the dividend is very bad news for people who “don’t stand behind AMC.”
AMC also released its second-quarter results after the market close, reporting a smaller loss and revenue that was in line with analysts’ expectations. The theater chain reported a net loss of $121.6 million, or a net loss of 24 cents a share, compared to a net loss of $344 million, or a net loss of 71 cents a share, in the same period last year.
AMC revenue was $1.166 billion for the second quarter, compared to $444.7 million for the same period last year. Analysts polled by FactSet were expecting revenue of $1.168 billion and a net loss of 31 cents, or a net loss of 23 cents per share on an adjusted basis.
“AMC just completed a spectacularly encouraging second quarter that elevates our spirits and brightens our outlook as we look ahead,” Aron said in the statement. “We believe our results for the second quarter of 2022 once again prove what we’ve been saying for a long time: when Hollywood releases films with broad consumer appeal, people will flock to see them in big and stunning numbers in theaters.”
In the second quarter, AMC had 59 million admissions to its theaters worldwide, according to Aron, up 168% from the 22 million admissions in the same quarter last year. “So we’d like to give a special ‘thank you’ to Doctor Stephen Strange, Tom ‘Maverick’ Cruise, Elvis Presley and all of the hungry man-eating Jurassic dinosaurs who graced our big screens during the quarter,” he added.
Shares in the meme-stock darling, which skyrocketed to a high of $72.62 on June 2, 2021, are down 29.7% this year. AMC stock closed Thursday down 2.47% at $18.66, well below its 52-week high of $52.79.
Wedbush analyst Alicia Reese expected AMC to report positive second-quarter EBITDA amid an industry rebound. Quality films are back in theaters, drawing the crowds back, she explained in a note earlier this week. “AMC is well-positioned to capture and retain higher market share than it was in pre-pandemic times as it improves its footprint both domestically and internationally,” she wrote. “Yet, theater exhibitors across the industry are spending more on marketing to bring audiences back to theaters while also grappling with macro headwinds such as higher concession costs, higher utilities and higher wages.”
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AMC, which bills itself as the largest theatrical company in the world, reported adjusted EBITDA of $106.7 million compared to a loss of $150.8 million in the same period last year. Wedbush had forecast adjusted EBITDA of $16 million.
The company has been on a rollercoaster ride over the past two years, taking the theater chain from a beleaguered pandemic victim to a meme-stock phenomenon. AMC took advantage of its stock price’s surge to hit the equity and debt markets, raising $917 million in January 2021. At the time, Aron said the new funding meant any talk of impending bankruptcy was “completely off the table.”
Earlier this year, AMC stunned Wall Street when it raked in $27. 9 million investment in Hycroft Mining Holding Corp. HYMC,
a gold and silver mining company that operates well outside of AMC’s core business.
During the conference call, Aron noted that Hycroft Mining just announced its largest exploration program in about a decade. “We strongly believe that our Hycroft investment will, excuse the pun, prove quite lucrative for AMC,” he said. “I am so confident that when the story is finally written it will be a good one for AMC.”
However, AMC’s financial health remains a concern, according to data from RapidRatings, a company that ranks the finances of public and private companies.
Of eight analysts polled by FactSet, three have hold ratings on AMC and five have sell ratings.