Theater Chain AMC Entertainment Announces Stock Sale to Raise $250 Million

Key Takeaways

• AMC Entertainment announced a stock sale to raise $250 million, and shares sank.
• The theater chain operator said the money was needed in part to make up for a weaker first-quarter box office because of last year’s strikes by Hollywood writers and actors.
• Last year, AMC held two other stock sales and a reverse stock split in order to raise cash.

AMC Entertainment shares tumbled over 14% in intraday trading Thursday as the theater chain operator announced another stock sale to generate cash. AMC wrote in a regulatory filing Thursday that it had entered into an equity distribution agreement with four financial institutions to sell shares of Class A common stock “from time to time” through an at-the-market offering, to raise a total of $250 million. AMC said the money was needed in part because last year’s strikes by Hollywood writers and actors negatively impacted first-quarter box office receipts. The company noted the funds would be used to “bolster liquidity, to repay, refinance, redeem or repurchase its existing indebtedness (including expenses, accrued interest and premium, if any) and for general corporate purposes.”

Previous Stock Sales and Reverse Stock Split

In November, shares sank when the company announced it was putting as much as $350 million of its Class A shares up for sale. That came just two months after it sold 40 million shares, bringing in $325 million. A month prior to that, AMC initiated a 1-for-10 reverse stock split to raise capital. AMC shares sank more than 14% to $3.70 as of 11:45 a.m. ET. They hit an all-time low of $3.59 last month.

Impact on AMC Shares

The announcement of the stock sale had an immediate impact on AMC shares, causing them to drop by over 14% in intraday trading. The stock price fell to $3.70, nearing an all-time low of $3.59 that was recorded the previous month. Investors reacted negatively to the news of another stock sale by the theater chain operator, reflecting concerns about the company’s financial health and its ability to navigate challenges in the entertainment industry.

Reasons for Stock Sale

AMC cited the weaker first-quarter box office performance as one of the reasons for the stock sale. The strikes by Hollywood writers and actors last year had a significant impact on box office receipts, leading to a need for additional funds to bolster liquidity and address existing indebtedness. By raising $250 million through the stock sale, AMC aims to strengthen its financial position and support its operations in the face of ongoing challenges in the entertainment sector.

Future Outlook for AMC

Despite the recent decline in share prices and the challenges faced by AMC Entertainment, the company remains focused on its long-term growth strategy. By raising capital through stock sales and other financial initiatives, AMC aims to position itself for success in a rapidly evolving industry. With a commitment to providing high-quality entertainment experiences for audiences worldwide, AMC continues to adapt to changing market conditions and explore new opportunities for growth and innovation.

For more information on AMC Entertainment’s stock sale and financial updates, please visit Investopedia.