AMC announces special dividend in the form of "Ape" preferred stock;  Inventory falls

AMC announces special dividend in the form of “Ape” preferred stock; Inventory falls

AMC Entertainment Holdings Inc. stock fell. rose more than 10% in extended trading Thursday after the company announced a special dividend in the form of “Ape” preferred stock.

The dividend is the latest step in a battle over stock issuance. AMC Entertainment Holdings Inc. AMC,
+ 2.47%
It switched to its own dividend after being unable to get shareholder approval to allow it to issue more common stock, according to the Wall Street Journal.

A special dividend for one AMC preferred equity unit per share of AMC’s Class A common stock, of $0.01 per share, will be issued at the close of business in August. 15. Special cash dividends are expected to be paid at the end of the official working hours in August. 19. AMC has applied to list AMC’s preferred stock units on the New York Stock Exchange under the symbol “APE”, beginning in August. 22. The symbol is a reference to the investors who turned the company into M shares, who often refer to themselves as “monkeys” or “monkey nation.”

“This new AMC Preferred Equity gives AMC currency that can be used in the future to strengthen our balance sheet, including by paying down debt or raising new capital,” AMC CEO Adam Aaron said in a statement. “As a result, this greatly reduces any near-term survival risk for AMC, as we continue to work our way through this pandemic.”

AMC will issue an APE dividend for each of 516,820,595 shares outstanding, according to Aaron. “The issuance of tradable preferred equity units to our shareholders only shows who is included in our existing shareholder base,” he said in the statement. The company has faced unfounded online conspiracy theories that there are millions of synthetic AMC shares in circulation, as well as calls for a stock recount, according to the Wall Street Journal.

The company, which issued an NFT “I own AMC” in January, will issue an NFT “I own APE” to shareholders.

Speaking during a conference call to discuss the findings, Aaron said AMC has the flexibility to release more “monkeys” in the future.

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“I think all of that makes us pretty much, I mean, pretty much stronger,” he added. The CEO, who referred to AMC’s critics as ” naysayers” and “prophets of doom” during the call, said the dividend is very bad news for people “who don’t endorse AMC.”

AMC also announced its second-quarter results after the market closed, reporting losses and revenue narrowing in line with analyst expectations. The movie theater chain posted a net loss of $121.6 million, or net loss of 24 cents per share, compared to a net loss of 344 million, or net loss of 71 cents per share, in the same period last year.

AMC’s second-quarter sales were $1.166 billion, compared to $444.7 million in the same period last year. Analysts polled by FactSet were looking for sales of $1.168 billion and a net loss of 31 cents, or a net loss of 23 cents per share on an adjusted basis.

“AMC just completed an amazingly encouraging second quarter which boosts our mood and increases our prospects as we look forward,” Aaron said in the statement. “Our results for the second quarter of 2022, in our minds, once again prove what we’ve been saying for so long, that with Hollywood releasing films with broad consumer appeal, people will flock to see them in cinemas in amazing, huge numbers.”

In the second quarter, AMC had a attendance of 59 million people in its theaters globally, up 168% from 22 million visitors in the same quarter last year, according to Aaron. “For that, we’d like to give a ‘special thanks’ to Dr. Stephen Strange, Tom ‘Maverick’ Cruz, Elvis Presley, and all those hungry Jurassic dinosaur-eating folks who graced our big screens this quarter,” he added.

Shares of meme-stock darling, which jumped to $72.62 on June 2, 2021, are down 29.7% this year. AMC’s stock closed 2.47% higher at $18.66 Thursday, well below a 52-week high of $52.79.

Wedbush analyst Alicia Reese was looking for positive EBITDA in the second quarter of AMC amid an industry recovery. She explained in a note earlier this week that the high-quality films are back in theaters, which has brought audiences back. “AMC is well positioned to capture and retain a higher market share compared to its pre-pandemic days, as it improves its footprint both domestically and internationally,” she wrote. “However, theater exhibitors across the industry are spending more on marketing to bring customers back to theaters, while also dealing with overall headwinds such as higher franchise costs, higher utility costs, and higher wages.”

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AMC, which describes itself as the world’s largest movie theater company, reported adjusted earnings of $106.7 million, compared to a loss of $150.8 million in the same period last year. Wedbush had forecast an adjusted EBITDA of $16 million.

The company has been on a rollercoaster ride over the past two years, taking the theater chain from beleaguered pandemic victim to meme stock phenomenon. AMC used the steep rise in its share price to tap the equity and debt markets, raising $917 million in January 2021. At the time, Aaron said the new funding meant any talk of imminent bankruptcy was “completely off the table.”

Earlier this year, AMC surprised Wall Street when it made $27. 9 million investment in Hycroft Mining Holding Corp. HYMC,
+ 0.97%And the
A gold and silver mine operating outside of AMC’s core business.

Speaking during the conference call, Aaron noted that Hycroft Mining had just announced its largest exploration program in nearly a decade. “We have every confidence that our investment in Hycroft will come to an end, and justify the word game, to be very profitable for AMC,” he said. “I am very convinced that when the story is finally written, it will be a good story for AMC.”

However, AMC’s financial health remains a cause for concern, according to data from RapidRatings, a company that assesses the finances of public and private companies.

Of the eight analysts surveyed by FactSet, three have AMC ratings and five have sell ratings.

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