AMC CEO explains stock divide after court ruling
'Companies that run out of money face financial ruin,’ CEO says
IMAX CEO Richard Gelfond joins 'Cavuto: Coast to Coast' to discuss IMAX film successes and the impact of the Hollywood strikes.
AMC Entertainment CEO Adam Aron said the Delaware Chancery Court’s decision late Friday to allow the company’s reverse 1-for-10 stock split was an "absolute imperative" in the wake of the industry’s pandemic-induced decline.
A shareholder vote initially approved the move on March 14, after AMC was sued in February for allegedly tampering with shareholder votes to convert preferred stock into common stock.
Shares of AMC and its preferred stock APE were actively traded.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMC | AMC ENTERTAINMENT | 4.58 | +0.00 | +0.10% |
| APE | NO DATA AVAILABLE | - | - | - |
AMC CHIEF EXECUTIVE DELIVERS WARNING AFTER STOCK CONVERSION REJECTED
"AMC should now be able to raise additional equity capital," Aron said in a post on X Monday.
"We can use this to shore up our cash reserves, pay down debt, invest in growth initiatives to strengthen our operating profitability and pursue transformative merger and acquisition opportunities," he added.
AMAZON REPORTEDLY CONSIDERING PURCHASE OF AMC ENTERTAINMENT
Under the settlement, AMC will provide stock worth an estimated $129 million to common shareholders to settle potential legal claims related to a stock conversion plan.
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Aron also called the court’s ruling a "significant milestone" and said details and timeline of a plan to convert "APE" units will be announced Monday.
Adam Aron, chief executive officer of AMC Entertainment Holdings Inc., participates in a panel discussion during the Milken Institute Global Conference in Beverly Hills, California, on Oct. 18, 2021. (Kyle Grillot/Bloomberg via Getty Images)
"Some of you fear dilution is a mistake no matter what. You are wrong," Aron continued.
"Companies that run out of money face financial ruin. Just ask Cineworld/Regal shareholders or ask Bed Bath & Beyond shareholders," he said.
AMC has raised $418 million in cash through the sale of APE units over the past 12 months.
The world's largest movie theater chain last week reported a surprise quarterly profit as the industry experienced a slight boost after declining significantly since the pandemic.
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Reuters contributed to this report.