Bloomberg
(Bloomberg) -- AMC Entertainment Holdings Inc. is seeking investor approval to issue as many as 500 million new shares, an opportunity for a financial cushion while the theater chain works to draw fans back to the movies.Management doesn’t necessarily intend to sell the new shares immediately, but wants the option to do so, Chief Executive Officer Adam Aron said Thursday in an interview on CNBC. The company announced the effort in a regulatory filing last month.AMC could use the shares to bolster its cash reserve, buy back debt at a discount, settle deferred theater rents or pursue an acquisition, Aron said. The shares have soared over the past six months, benefiting from a Reddit-fueled investing frenzy that sent heavily shorted stocks into the stratosphere.“There are a lot of good reasons for shareholders to give us the authority,” Aron said.Shares of the Leawood, Kansas-based company fell as much as 6.4% to $9.56 in New York. The company’s 12% second-lien notes due 2026 rose more than a cent on the dollar to a high of 82.88 cents, according to Trace bond trading data.AMC has raised more than $1 billion in financing this year, which helped stave off bankruptcy while its theaters were closed because of the coronavirus pandemic. The company said previously it might seek more financing, and some creditors have suggested it sell more shares to pay down debt.Theater chains have been hard hit by government-mandated shutdowns during the Covid-19 pandemic. While the company has been able to reopen all but a small portion of its locations, it’s still operating at limited capacity to ensure extra space for customers, and many moviegoers have been reluctant to attend. The problem has been compounded by studios delaying major releases that drive ticket sales.AMC’s shares traded at historic lows for much of 2020 as the Covid-19 crisis engulfed the company. Management started issuing “going concern” notices last June, warning the company risked running out of cash. The shares have jumped more than 350% this year as a result of Reddit traders and the infusion of fresh capital.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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