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AMC Entertainment shares fell as much as 5% on Thursday after the company’s CEO informed CNBC of his intention to seek shareholder approval to issue 500 million shares.
AMC weathered the coronavirus pandemic through fundraising efforts that averted bankruptcy and allowed the movie theater chain to continue operating, albeit at a limited capacity.
In January, the company revealed that it had secured enough funding to remain open and operational until 2021. However, AMC later realized that it could raise even more cash and capitalize on the recent Its stock rally on Reddit, which fueled its market value.
The company’s shares have risen more than 375% since January, and its market capitalization currently hovers at just under $ 4.6 billion. AMC stock hit a 52-week low at $ 1.91 on January 5, but then climbed to $ 20.36, setting a 52-week high on January 27.
“Dilution is something that is close to our hearts, but I will say that we are formally seeking the approval of our shareholders to authorize an additional 500 million new shares that the company could issue if it wishes,” said CEO Adam Aron on CNBC’s “Squawk on the Street”. “There are a lot of advantages for our shareholders to have more authorized shares in the market.”
“We will be sensitive to dilution issues, but at the same time, there is an opportunity to build up our cash reserves and there is an opportunity to buy out debt at a discount or pay deferred theater rents,” a- he added. “There are a lot of good reasons why shareholders give us power.”
AMC first announced its intention to offer the stock in March and shareholders will vote on the measure in May.
Aron noted that the increase in vaccinations and new film releases is already having a positive impact for AMC. He said Wednesday’s attendance at the “Godzilla vs Kong” opening in North America was 10 times greater than it has been every other Wednesday so far in 2021.
Warner Bros. said Thursday that “Godzilla vs Kong” secured $ 9.6 million in ticket sales on its opening night, a record start for the pandemic.
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