Hedge fund CEO Bruce Richards now says he’s ‘super bullish’ on AMC’s new APE conversion as the proposed rule is expected to go into effect next Thursday.
Bruce Richards is the CEO of Marathon Asset Management, which manages a family of investment programs focused on credit strategies including hedge funds, managed accounts, single-client funds and collateralized loan, and debt obligation vehicles.
Richards is rather enthusiastic about AMC Entertainment’s ability to raise as much as $8 billion, though he states his team thinks $1 billion to $2 billion is more realistic.
“I wouldn’t worry about the writers strike, and the box office numbers look like record numbers to us, and greater than pre-covid number, in terms of revenue, so, we’re super bullish, but think about that,” he told Squawk on Tuesday.
“We can make a +17% return, +10% on the cash, and the +25% price pop on price, and we can make this return, we think it’s a high tang return for taking senior bank debt risk in a very top of capital structure of AMC. We think the smartest play for AMC is actually buying the bank debt which is going to parr, which is offering these staggering returns for the unit of risk that you’re taking.
Richards says that AMC is great company and joked that he tried to get in to see Barbie and Oppenheimer but that he was turned away at the door twice due to tickets being sold out.
“I will go before the summer is over, I promise”, he stated.
On Tuesday, AMC stock rose more than +8% while APE shares rose nearly +2%.
Richards’ optimism certainly brings forth an excitement that hasn’t been seen in quite some time.
Will this APE conversion trigger an AMC short squeeze? I’m curious to know what you think.
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AMC Speaks on Short Sellers Covering Prior to New Conversion
AMC Entertainment is answering questions on short sellers covering prior to its newly approved conversion proposal.
Shares of the company fell more than -30% after hours last Friday as APE shares rose +30%.
On Monday, AMC stock fell more than -33% while APE shares rose nearly +18%.
Will short sellers be required to cover their positions before the Reverse Stock Split and Conversion?
According to AMC’s new 8-K filing, AMC expects that the deliveries under stock borrowing arrangements will be adjusted in the regular way to account for the Reverse Stock Split or, in the case of contracts on APEs, the Conversion.
However, AMC states that it “does not determine and is unable to provide interpretive advice on the impact of these events on the contractual terms governing stock borrowing arrangements.”
How will short sellers be affected by the Litigation Settlement Payment?
“AMC does not determine and is unable to provide interpretive advice on the impact of the Litigation Settlement Payment on the contractual terms
governing stock borrowing arrangements.”
AMC’s reverse stock split will go into effect on Thursday, August 24.
The conversion of APE shares into AMC common stock will occur the following day, Friday August 25.
The litigation settlement will then take place on Monday, August 28.
Will there be large failure-to-deliver (“FTDs”) like when the APE was distributed?
AMC Entertainment states that while they cannot predict the trading impact of these corporate events, given the significant transactions that will occur over successive trading days, it is possible there will be large FTDs like when the APE was distributed.
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