AMC Entertainment CEO considering more 'transformational' M&A deals after Hycroft stake: report
Retail investors have helped the movie theater chain amass a $1.8B war chest
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AMC Entertainment CEO Adam Aron has signaled that the movie theater chain will capitalize on its meme stock status with more "transformational" deals in the merger and acquisition space following its 22% stake in gold and silver miner Hycroft.
"I'd like to think there will be more third-party external M&A announcements going forward where AMC can reach for the stars and intriguing investments that have potentially attractive returns," Aron told Reuters on Sunday.
A representative for AMC did not immediately return FOX Business' request for comment.
AMC ENTERTAINMENT BUYS STAKE IN GOLD, SILVER MINER HYCROFT
Under the terms of the deal, Hycroft said AMC and precious metal investor Eric Sprott would each invest $27.9 million in cash in Hycroft in exchange for 23.4 million units, with each unit consisting of one common share of Hycroft and one common share purchase warrant.
The units are priced at $1.19 per share, which complies with the minimum bid price required by Nasdaq for an at-the-market purchase. Each purchase warrant is exercisable for one common share of Hycroft at a price of $1.07 per share and will carry a five-year term from the date of issuance.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMC | AMC ENTERTAINMENT | 4.95 | -0.02 | -0.40% |
| HYMC | HYCROFT MINING HOLDING CORPORATION | 2.34 | +0.01 | +0.43% |
Hycroft was taken public in 2020 through a merger with special-acquisition purpose company Mudrick Capital Acquisition Corporation. The SPAC is backed by founder Jason Mudrick, who invested $100 million in AMC in December 2020 to help keep the company afloat during the coronavirus pandemic, according to The Wall Street Journal. AMC also raised $230.5 million by selling 8.5 million shares to Mudrick in June.
In addition to the investment from AMC and Sprott, Hycroft completed a $138.6 million at-the-market offering this month, raising a total of $194.4 million in gross proceeds. Hycroft shares have skyrocketed over 200% so far this year.
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AMC's Hycroft stake comes as it has amassed an $1.8 billion war chest following its popularity with retail investors, previous share sales and the box office success of films like "Spider-Man: No Way Home" and "The Batman."
News of the Hycroft deal has drawn criticism from some Wall Street analysts, who have argued that the money would be better spent on reducing AMC's own debt, which exceeded $5 billion as of the end of 2021.
Aron has defended the move, telling Reuters that "transformational M&A is mandatory" and arguing that AMC shareholders gave the company capital to deploy "with the clear expectation that we are ... going to do exciting things with the money they entrusted to us."
"While the Hycroft investment is pretty far from home, it does rely on a core competency of our company to understand balance sheets, and raising cash, and solving liquidity problems," Aron added.
In addition to the Hycroft investment, other actions AMC has announced to strengthen its business include adding theaters to its global network, offering alternative programming, accepting cryptocurrencies for online movie ticket and concession purchases and plans to make a foray into the retail popcorn business and launch an AMC branded credit card.