AMC Entertainment’s stock fell swiftly Thursday after the company announced a new $110 million capital raise and a proposed reverse stock split that will require shareholder approval.
The shares were halted briefly after the opening bell as AMC hit a new 52-week low. The stock recovered from double-digit losses earlier in the day to finish down over 7% at $4.91 a share. AMC is down nearly 82% this year.
The company said it plans to raise the new equity through a sale of its APE units – a form of preferred shares referring to the “Apes” moniker adopted by meme stock investors – to Antara Capital LP at a weighted average price of 66 cents a share. On Wednesday, the APE closing price was 68.5 cents. This reduces its debt load by $100 million, the company said.
“Clearly, the existence of APEs has been achieving exactly their intended purposes. They have let AMC raise much welcomed cash, reduce debt and in so doing deleverage our balance sheet and allow us to explore possible [mergers and acquisition] activity,” CEO Adam Aron said in a news release Thursday.
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