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AMC Entertainment has struck a distribution pact to begin selling its new preferred share class — or “APE” units — after they were handed out to shareholders as a dividend.
On Monday, AMC in an SEC filing said it had a deal with Citigroup Global to act as its sales agent related to the APE preferred equity shares, which appeal to the exhibitor’s base of retail investors. As part of a sales prospectus, AMC said Citigroup Global may offer and sell up to 425 million AMC preferred equity units.
In August, AMC issued its special dividend to investors of one AMC preferred equity unit for each AMC Class A common stock outstanding. The company then listed these units on the New York Stock Exchange under the symbol “APE,” in reference to the group of investors who have helped revive the stock, starting Aug. 22.
The move to now offer and sell the APE dividend, subject to shareholder approval, could prove controversial as the units always offered an option for AMC to raise yet more cash. Stock in AMC was off 19 cents, or around 2.3 percent, at $7.80 in pre-market trading.
And as with earlier avenues by which AMC has raised fresh capital, the exhibitor outlined elaborate risk factors.
“You could lose all or part of your investment. Additionally, the risks and uncertainties discussed in this prospectus or in any document incorporated by reference into this prospectus are not the only risks and uncertainties that we face, and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, results of operations or financial condition,” AMC said in the prospectus.
The company added that, if it could not fully recover its movie exhibition business and had to seek a court or non-court restructuring of its liabilities, “… in the event of such future liquidation or bankruptcy proceeding,” shareholders faced losing their investments.
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