AMC Entertainment Holdings Inc. (NYSE:AMC) CEO Adam Aron is urging shareholders to vote ‘yes’ on the proposals during the next shareholder meeting, one being dilution.
“A link to the proxy filed with the SEC on our March 14 shareholder meeting. AMC’s Board & I strongly believe the proposals are crucial for AMC’s future. We unanimously recommend that you #VoteYesAMC. They are in the best interest of AMC & our shareholders,” said Adam Aron on Twitter.
The first proposal would dilute the stock by increasing the number of shares from 524,173,073 to 550,000,000.
Many shareholders are on board with doing what the company says is necessary to move forward in 2023.
Diluting the stock could help AMC Entertainment raise more cash for example.
Other shareholders want to know from the CEO how the company plans to utilize this capital, though only very little is known; debt has been AMC’s primary focus to tackle.
AMC Shareholder Meeting Proposals
Below are the three proposals being presented for AMC’s shareholder meeting.
Proposal No. 1: To approve an amendment to our Third Amended and Restated Certificate of Incorporation (our “Certificate of Incorporation”) to increase the total number of authorized shares of Common Stock from 524,173,073 shares of Common Stock to 550,000,000 shares of Common Stock (the “Share Increase Proposal”);
This proposal will dilute AMC Entertainment stock, but it’s essential for the company’s growth whether shareholders like it or not.
Voting ‘no’ on proposal 1 could stunt the company’s capabilities to raise cash short-term.
Voting ‘yes’ will allow the company to raise capital to stay afloat, though it means AMC’s share price may plummet as a result.
This is why the second proposal will offset the share price without affecting the value of shareholder’s portfolios.
Proposal No. 2: To approve an amendment to our Certificate of Incorporation to effectuate a reverse stock split at a ratio of one share of Common Stock for every ten shares of Common Stock, which together with the Share Increase Proposal, shall permit the full conversion of all outstanding shares of Series A Preferred Stock into shares of Common Stock (the “Reverse Split Proposal” and collectively with the Authorized Share Increase Proposal, the “Charter Amendment Proposals”);
A 1-for-10 reverse stock split will decrease the number of shares investors hold while raising AMC’s share price by 10x.
Shareholder who own 10 shares of AMC will own 1 share of AMC priced at $50 instead of owning 10 shares priced at $5 per share.
The value won’t change, but the number of shares and share price will.
A higher share price buys AMC Entertainment time.
Proposal No. 3: To approve one or more adjournments of the Special Meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the Special Meeting to approve and adopt the Charter Amendment Proposals (the “Adjournment Proposal”).
This gives AMC the right to approve these proposals should there not be sufficient votes.
APE Conversion to AMC Stock
For APE share to convert into AMC stock, shareholders will need to vote ‘yes’ on both the first and second proposals.
Here’s a statement from the company’s filing:
“In order to effect the conversion of APEs into Common Stock, stockholders must approve BOTH the Share Increase Proposal and the Reverse Split Proposal. The Share Increase Proposal alone will not create sufficient authorized Common Stock, without the Reverse Split Proposal, to enable the conversion to occur. Nor will the Reverse Split Proposal alone satisfy the terms of the Series A Preferred Stock to enable the conversion to occur.“
AMC shareholders will be receiving a proxy link from their brokers where they will be able to cast their votes on all three proposals.
What are your thoughts on these proposals?
Leave a comment down below.
Source: Proxy statement.
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