AMC Extends Rally After $230.5 Million Stock Sale to Mudrick

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Jun 01 2021, 4:43 PMJun 01 2021, 5:21 PMJune 01 2021, 4:43 PMJune 01 2021, 5:21 PM

(Bloomberg) -- AMC Entertainment Holdings Inc. extended last week’s rally and rose in premarket trading Tuesday on plans to sell stock to shareholder Mudrick Capital at a premium.

The movie theater operator, which has become a poster child for retail traders, climbed 11% as of 7:05 a.m. to $28.90 after entering a purchase agreement with New York-based Mudrick to sell 8.5 million shares of Class A common stock for a total value of $230.5 million, or $27.12 apiece. The stock closed at $26.12 on Friday, after nearly tripling last month.

AMC plans to use the cash proceeds from the sale for acquisitions of additional theater leases, as well as investments into AMC’s existing theatres, the company said in a statement. It is in discussions with multiple landlords of theaters formerly operated by Arclight Cinemas and Pacific Theatres, said Chief Executive Officer Adam Aron.

“With this agreement with Mudrick Capital, we have raised funds that will allow us to be aggressive in going after the most valuable theatre assets, as well as to make other strategic investments in our business and to pursue deleveraging opportunities,” he said in the statement.