New APE offering ‘takes survival risk off the table’
AMC Entertainment CEO Adam Aron says the company’s new AMC Preferred Equity (APE) shares should allay fears that the movie chain could cripple under the weight of debt incurred during the COVID-19 pandemic.
“It takes survival risk off the table in the near term,” Aron said in an exclusive Yahoo Finance Live interview on Monday (video above). “So we can raise cash if we need it. That is good for our shareholders.”
AMC stock popped more than 15% as of 12:53 p.m. ET on Monday.
The cinema chain surprised a few on Wall Street late last week by announcing a new dividend in the form of preferred equity units. AMC has applied to list the shares on the New York Stock Exchange (NYSE) under the ticker symbol $APE in a nod to the retail investors who powered the stock during the COVID-19 pandemic and commonly refer to themselves as apes.
A single APE unit will be granted for each common share, meaning that about 517 million shares of this new stock will be formed. Aron said the company could theoretically list five billion APE shares based on what was approved by shareholders back in 2013 but added that he has no plans to do so.
Aron added that this latest clever initiative (the other being the gold mine AMC bought earlier this year) will help AMC raise cash to reduce debt and look at acquisitions of more movie theater chains.
“If it’s good for our shareholders, it’s bad for the people who wish us harm,” Aron said. “There are a lot of people out there who wish AMC harm, and much to their chagrin, we have created this preferred stock.”
“The other thing it lets us do is raise capital to grow, raise capital for M&A activity, and raise capital to pay down debt,” Aron added. “These are all good things for AMC. That, combined with an improving box office, a recovery from the horrible pandemic of 2020 and early 2021, these are good days for AMC.”