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AMC Entertainment share price rose again following the news of special APE dividend

The domestic box office will go into a funk for two-and-a-half months due to the lack of a tentpole product, but AMC Entertainment’s stock will continue trucking.

World no. 1 Following Thursday’s news that the exhibitor was offering APE investors one AMC preferred equity share for each share of AMC Class A common stock, AMC’s share price jumped 31% on Friday from $16.97 to $22.18. Well, this morning they jumped again by 14%, opening at $24.06 and hitting a high of $27.50. At the time of publication of this post, AMC shares were trading at $25.02.

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The preferred equity stock will be issued to AMC common shareholders on a dividend date of August 19 and will be listed on the New York Stock Exchange under the symbol APE.

The idea being that retail investors don’t want to see any more stock dilution, AMC’s APE share manipulation gives exhibitors more financial flexibility. The new preference share is similar to owning another stock and the AMC is able to make deals and pay off debt.

“While no one’s crystal ball can accurately predict the ups and downs or volatility of the stock market, the financial interest our shareholders have in both stocks and
APEs will be at a company that we believe is significantly stronger than AMC prior to making this announcement this afternoon,” AMC CEO Adam Aron said on Thursday’s Q2 earnings call.

“With the creation of APEs, AMC is strengthening our company deeply and fundamentally. We already have shareholder approval which means our board can decide to issue more APEs in the future above and beyond the exit with this initial dividend. Given the flexibility that the ability to issue more APEs gives us, we can easily fund if we choose to. We believe that being able to collect will greatly reduce any survival risk as we continue to work through recovery and adaptation through this pandemic. Rather than worrying about survival, the flexibility afforded us by APEs will instead allow AMC to continue our efforts to try to thrive and take off. ” added Aron.

He added on Thursday, “I act and think like a shareholder, because I am also a shareholder and a big one. At the current AMC share price, I now own approximately $15 million in AMC stock and my previously granted, but unvested shares assuming target vesting levels that call me an economic stake in AMC of over $50 million. It’s a very obvious topic, but it’s a powerful incentive for me to do what’s right for all of our shareholders.

AMC’s Q2 sales were boosted thanks to a blockbuster summer Top Gun: Maverick $1.16 billion versus $444.7 million in the same quarter last year. The performer’s net loss narrowed to $121.6M from $344M Q2 2021.

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