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AMC Theatres has filed to potentially sell 11.55 million shares on the back of steep rises in its stock price due to Reddit-fueled retail trading.
But in its SEC filing the cinema giant told investors, “We caution you against investing in our class A common stock, unless you are prepared to incur the risk of losing all or a substantial portion of your investment.” That warning sent shares in parent AMC Entertainment Holdings Inc. down $2.51, or 4 percent, to $60.21 in premarketing trading as the SEC filing underlined recent market volatility unrelated to its fundamental business.
Stock in AMC reached an intraday high on the New York Stock Exchange of $72.62 on June 2, before closing at $62.55. “We believe that the recent volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last,” AMC said.
But those warnings did little to deter investor appetite for AMC stock as the cinema giant on Thursday said it had raised another $587.4 million of new equity capital, before commissions and fees, at an average price of $50.85 per share.
In a statement, AMC CEO Adam Aron said of his latest capital raise: “Bringing in an additional $587.4 million of new equity on top of the $658.5 million already raised this quarter results in a total equity raise in the second quarter of $1.246 billion, substantially strengthening and improving AMC’s balance sheet, providing valuable flexibility to respond to potential challenges and capitalize on attractive opportunities in the future.”
In a separate SEC filing, AMC’s board said it will seek investor approval at an upcoming annual meeting of stockholders set for July 29 to boost its authorized shares by 25 million, but not until Jan. 1, 2022, to allow the “company to take timely advantage of market conditions and favorable financing and other opportunities.”
In late April, AMC pulled an earlier plan from the board to authorize 500 million new shares of the company’s stock, even as the movie theater chain had no plans to sell all 500 million shares if investor approval was given.
Also this week, AMC said it raised $230.5 million in fresh cash via a separate share sale to hedge fund Mudrick Capital, which subsequently unloaded the stake. The cinema chain has seen its share price dramatically rise and fall due to casual trading encouraged by the online WallStreetBets group on Reddit.
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