AMC came close to bankruptcy during the pandemic and became popular with meme-stock investors.
Photo: Richard B. Levine/Zuma Press
AMC Entertainment Holdings Inc.
said Thursday that it plans to issue a dividend to all common shareholders in the form of preferred shares, after it had difficulty issuing more common shares.
The cinema chain, which skirted bankruptcy during the pandemic and became a darling of meme-stock investors, is paying the dividend in the form of preferred equity units, which it has applied to list on the New York Stock Exchange under the symbol “APE.” The name is a nod to the crowd of individual investors, known as apes, who helped rescue the chain from the brink of bankruptcy.
One Ape unit will be granted for each existing common share, meaning that close to 517 million new Ape units will be created, the company said.
AMC raised billions of dollars during the pandemic by selling new common shares, though last year it ran out of more to sell. The company tried to obtain shareholder approval to enable it to issue more common shares, but had difficulty corralling its investor base to support the initiative, in part due to some investors’ fears of dilution.
The company’s new move to instead offer preferred equity units is a workaround to that constraint, and frees up a substantial number of units that it could sell as it continues to face challenges due to the continuing Covid-19 pandemic, a person familiar with the matter said.
After offering the 517 million Ape units as a dividend to shareholders, AMC will still have close to 4.5 billion remaining units that could be sold, according to securities filings.
The company has faced unsubstantiated conspiracy theories on the internet that there are millions of synthetic AMC shares in circulation, as well as demands from some investor personalities on social media for a share recount. By issuing one Ape unit for each existing common share, AMC is hoping to put those theories to rest, because only holders of legitimate shares would receive units, the person said.
AMC common shares traded as high as $19.38 on Thursday, giving the company a market capitalization of more than $9.9 billion, before the news of the dividend issuance.
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