AMC Entertainment Backtracks on Massive 500 Million Share Dilution Plan
But it will push ahead with a smaller 43 million share offering plan.
AMC Entertainment Holdings (NYSE:AMC) isn’t going to dilute investors after all. The movie theater operator has reportedly scrapped its plans to flood the market with 500 million new shares. Instead, it will sell just 43 million new shares.
Chairman and CEO Adam Aron had told CNBC’s Jim Cramer last week that by doubling the theater’s share count the company would be able to pad its bank accounts at a time when the stock was still trading at elevated levels. The massive dilution that would result from the influx of stock was the unfortunate, but necessary, collateral damage of giving AMC a stable financial foundation.
Analysts and shareholders were not pleased with the plan, though, and the theater chain’s board of directors subsequently squelched the idea, though it also said it reserved the right to revisit it in the future.
The new, smaller at-the-money share offering could still see AMC generate gross proceeds of about $500 million at current stock prices. The theater operator said the proceeds would go toward general corporate purposes, including working capital; repaying, refinancing, redeeming, or repurchasing its existing debt; capital expenditures; or other investments.
AMC also gave a preliminary look at its first-quarter earnings results and said it anticipated posting $148 million in revenue compared to $941.5 million last year, with adjusted losses of between $295 million and $302 million versus a $3.1 million profit a year ago.
That’s better than the $515 million loss analysts were expecting, though it came up short of their revenue forecasts, which stood at a consensus average of $158.4 million.This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
