- AMC shares dropped over 9% on Monday after the company announced new financing and debt restructuring plans.
- The company will convert at least $143 million of existing debt into equity, diluting current shareholders.
- An additional $195 million in debt may be converted to stock in the future, creating potential for further dilution.
- AMC executives say these moves reduce debt, extend payment deadlines, and boost liquidity.
- Meme stock momentum for AMC has faded, with the stock falling more than 50% in the past year.
AMC stock fell more than 9% during Monday trading, following an announcement of new financing deals. The company made agreements with creditors to swap some of its outstanding debt for a mix of new debt and common stock. This has resulted in a decline in the share price as shareholders face dilution.
Under these plans, holders of AMC‘s exchangeable notes will receive 79.8 million common shares in return for at least $143 million of outstanding notes due in 2030, which carried interest rates between 6% and 8%. There are provisions for an extra $195 million in debt to be converted to stock in the future. Benchmark analyst Mike Hickey stated, “The transaction reduces leverage, extends maturities and improves liquidity, though it introduces near-term dilution and potential for additional share issuance tied to future conversions.”
The company’s stock has struggled in recent months, with investors reacting negatively to the prospect of more shares entering the market. As a result, the value of current shareholders’ positions has dropped. AMC has seen its share price decline by more than half over the last year, including a decrease of over 40% so far this year.
In a social media statement, AMC CEO Adam Aron described the restructuring as “one of the more important developments in AMC’s multi-year effort to fight back from the ravages that COVID prompted in 2020.” Theaters like AMC faced falling revenues after COVID-19 and competition from streaming services.
Aron also highlighted recent improvements in box office performance, pointing to several movie releases that have supported ticket sales in recent months. Despite these positive comments, analyst sentiment remains cautious due to the dilution impact and continued market uncertainty.
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