Shares of AMC Entertainment fell up to 5% on Thursday after the company’s CEO informed CNBC of his plans to get shareholder approval to approve an additional 500 million shares.
AMC has navigated them Coronavirus pandemic through fundraisers that have prevented bankruptcy and allowed the cinema chain to keep working, albeit with limited capacity.
In January, the company announced that it had secured enough funding to stay open and operational through 2021. However, AMC later realized it could raise even more money and benefit from the recent Reddit rally on its stock that fueled its market value.
The company’s shares are up more than 375% since January, and market capitalization currently stands at just under $ 4.6 billion. AMC stock hit a 52-week low of $ 1.91 on Jan. 5, but then rose to $ 20.36 and hit a 52-week high on Jan. 27.
“The dilution is important to us, but I’ll say we are officially asking our shareholders for approval to approve an additional 500 million new shares that the company could issue if they choose,” said CNBC CEO Adam Aron “Squawk on the street.“Our shareholders have many advantages when there are more authorized shares in the market.”
“We will be sensitive to dilution issues, but at the same time there is an opportunity to build up our cash reserves and buy back debts at a discount or pay deferred theater rents,” he added. “There are many good reasons for shareholders to give us authority.”
AMC first announced plans to apply for additional share approval in March and shareholders will vote on the measure in May.
“We have asked our shareholders to approve an increase in our authorized share capital of 500 million shares,” an AMC representative said in a statement on Thursday. “This is not approval of an actual issue of these shares, but would give the AMC Board the flexibility to approve future issues of shares for a variety of purposes if the Board determines that it is in the best interests of AMC shareholders. If you navigate In these uncharted waters of the pandemic, flexibility is a very good thing. “
Aron found that the increase in vaccinations and new movie releases is already having a positive effect on AMC. He said attendance at the North American Godzilla vs. Kong opening on Wednesday was ten times that of every other Wednesday in 2021.
Warner Bros. said on Thursday that “Godzilla vs. Kong” secured $ 9.6 million ticket sales a record debut for the pandemic on the opening night.
Clarification: This story has been updated with AMC’s comment that the company is seeking approval to increase its authorized share capital to give it the flexibility to potentially offer shares. It is not an approval of an actual share issue.
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This article originally appeared on www.cnbc.com
