The company announced that it has entered a new agreement with Citigroup, Barclays, B Riley Securities, and Goldman Sachs to periodically sell shares.
AMC stock fell more than -36% on Wednesday on the announcement marking more than -75% in losses this year-to-date.
On social media, shareholders allege crime and market manipulation to be taking place.
“On September 6, 2023, AMC Entertainment Holdings, Inc. entered into an equity distribution agreement with Citigroup Global Markets Inc., Barclays Capital Inc., B. Riley Securities, Inc., and Goldman Sachs & Co. LLC as sales agents (each, a “Sales Agent”, to sell up to 40,000,000 shares of Class A common stock, par value $0.01 per share, of the Company (the “Common Stock”), from time to time, through an “at-the-market” offering program.
Subject to the terms and conditions of the Equity Distribution Agreement, the Sales Agents will use reasonable efforts consistent with their normal trading and sales practices, applicable law and regulations, and the rules of the New York Stock Exchange to sell the Common Stock from time to time based upon the Company’s instructions for the sales, including any price, time or size limits specified by the Company.
Each Sales Agent will receive compensation of up to 2.5% of the gross sales price of the Common Stock sold through it as a Sales Agent under the Equity Distribution Agreement, and the Company has agreed to reimburse the Sales Agents for certain specified expenses.
The Company has also agreed to provide the Sales Agents with customary indemnification and contribution rights.
The Company is not obligated to sell any Common Stock under the Equity Distribution Agreement and may at any time suspend solicitation and offers under the Equity Distribution Agreement.
The Equity Distribution Agreement may be terminated by the Company at any time by giving written notice to the Sales Agents for any reason or by each Sales Agent at any time, with respect to such Sales Agent only, by giving written notice to the Company for any reason,” says the filing.
AMC Will Now Raise Capital By Selling Stock
AMC Entertainment will now be able to raise cash by selling shares from time to time, as the company sees fit.
“The Company intends to use the net proceeds, if any, from the sale of the Common Stock pursuant to the Equity Distribution Agreement 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.”
The SEC filing comes after AMC announced the upcoming film centered around Taylor Swift’s concert tour, Taylor Swift | The Eras Tour, which earned $26 million dollars in advance ticket sales less than three hours after tickets first went on sale.
“AMC is still recovering from the Covid-19 pandemic which temporarily shuttered most theaters across the country and shifts in the industry with more films going directly to streaming.
However, the movie industry recently saw the fourth largest box office weekend in U.S. history with the blockbuster releases of Barbie and Oppenheimer“, says Forbes.
AMC has not announced a timeline for when this offering could begin.
However, the company said it plans to use the proceeds of the stock sale to pay down its debt.
In recent news, Wedbush upgraded AMC Entertainment from ‘underperform’ to ‘neutral’ with analysts currently looking at a 17.98% upside, Nasdaq reports.
Investor sentiment at the moment is quite strong — what are your thoughts? Leave a comment down below.
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