AMC to raise $110 million of new equity capital by selling preferred APE stock
Yahoo Finance Live anchors discuss reports that AMC Entertainment will raise $110 million in new equity capital by selling its APE units.
Video Transcript
JULIE HYMAN: I got to get to one more thing, a bonus thing this morning, if you will. And that is AMC. The company announced it will raise $110 million of new equity capital by selling its APE units to Antara Capital at a weighted average price of $0.66 per share. And the move is an effort for AMC to remove its long-term debt off its books and potentially improve profitability.
A couple of things to mention here. Where the stock is trading now is its lowest going back to January 25, 2021. That's just before it had its first big meme surge. So that's observation number one.
Observation number two, man, for a company that portrays itself as really being oriented toward retail investors, what a gibberish jargon of an announcement related to this. It is very hard to parse out what exactly-- how exactly this complex transaction is going to work. And it's not very shareholder friendly.
BRIAN SOZZI: True. I'm so-- I think I'm rubbing off on you a little bit. Give me a fist bump.
JULIE HYMAN: Thank you very much. I will say the APE shares, those other shares that are tracking, they're flying right now, even as AMC plunges.
BRIAN SOZZI: I have a tear coming to my eye. I love that.
JULIE HYMAN: What did I do?
BRIAN SOZZI: It's really good because you're right. This is a very complicated thing. And if you're at home and you've been training at AMC, the bottom line is this, here's a company I think that is very focused on reducing debt and getting very creative to help its bottom line in any way it could in what is a very challenging I think movie theater environment. This at its very basic level will reduce the debt on their balance sheet, bring down interest expenses, and then maybe next year profits will improve just a little bit more.
But I think they're lowering their interest expenses by $10 million. But a very clever transaction and one that, look, we have to dig more into. It is very complicated.
BRAD SMITH: Right. And it's $100 million that they're looking to reduce their outstanding debt as a result of this deal too. So we'll see exactly where the APE shares continue to move on this.
JULIE HYMAN: This also, by the way, includes a reverse split of the AMC common shares at a 1 to 10 ratio. So a reverse split effectively means, like, it's a consolidation of shares. So it's 1 to 10. So that means if you have 10 shares, you'll end up getting one share?
BRIAN SOZZI: You usually see this with stocks that are under $5. It just helps visually improve the stock price. Of course, not impacting the valuation of the company. Just visually improves what it might look like. I'm just trying to break it down. It's complicated stuff, guys.
BRAD SMITH: It is indeed. A big transaction, at least, for Antara Group, as well, and AMC and the APE shares moving on this.
BRIAN SOZZI: Real quick. I'm glad you mention Antara. We did not mention that. If you--
JULIE HYMAN: What is Antara?
BRIAN SOZZI: And they are focused-- the CEO or founder of that company focused on distressed situations. So a lot of background in that, which is also a nice interesting wrinkle here, I think.
BRAD SMITH: All right, well, for those that are booking tickets on AMC or perhaps holding on to some APE shares, a big day ahead for you to be tracking the stock moving.
