AMC Theater Chain Yanks Plan to Issue 500 Million New Shares

(Bloomberg) -- AMC Entertainment Holdings Inc. scrapped a contentious proposal to issue 500 million new shares, saying a separate plan to sell a far smaller sale would be sufficient to meet the movie-theater chain’s cash needs this year.

The board will no longer seek investor approval to boost its authorized shares by 500 million, the company said in a statement. It also registered with the U.S. Securities and Exchange Commission Tuesday to sell 43 million shares through a so-called at-the-market equity offering.

The cinema chain managed to skirt bankruptcy during the pandemic, and had hoped that issuing new stock could help solidify its comeback. But Chief Executive Officer Adam Aron already had to assure investors that the larger sale wouldn’t take effect this year. He said earlier this month that short sellers had seized on the company as it tries to bounce back from pandemic lockdowns.

AMC’s shares have gotten a boost from Reddit-fueled investors this year, sending the stock up 441% this year. But issuing 500 million shares would more than double the stock outstanding, diluting current investors’ interest.

“Many of our stockholders are telling us to wait,” Aron said on Tuesday. “It is important to listen to these owners of our company, and that’s exactly what we are going to do.”

AMC has already raised more than $1 billion in financing, helping keep it afloat while theaters were closed because of the coronavirus pandemic. Some creditors have promoted the idea of selling more shares to pay down debt. The chain’s bonds have rallied as more of its locations have been allowed to reopen, but much of the debt still trades at distressed levels.

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