Shares of AMC Entertainment Holdings Inc. fell more than 10% in extended trading Thursday after the company announced a special dividend in the form of “Ape” preferred shares.
The dividend marks the latest move in a fight over share issuance. AMC Entertainment Holdings Inc. AMC, +2.47% has resorted to the special dividend after failing to get shareholder approval to let it issue more common stock, according to the Wall Street Journal.
The special dividend of one AMC preferred capital unit will be issued for each share of AMC Class A common stock, par value $0.01 per share, outstanding at the close of business on the 15 August The special dividend is expected to be paid at closing. of business on August 19. AMC has applied to list its AMC Preferred Stock Units on the New York Stock Exchange under the symbol “APE,” effective August 22. The symbol is a nod to the investors who turned the company into a meme. stock, who often refer to themselves as “monkeys” or “ape nation”.
“This new AMC Preferred Equity gives AMC a currency that can be used in the future to strengthen our balance sheet, including by paying down debt or raising new equity,” AMC CEO Adam Aron said in a statement “As a result, this dramatically reduces any short-term survival risk for AMC as we continue to work through this pandemic.”
AMC will issue an APE dividend for each of its 516,820,595 shares outstanding, according to Aron. “Issuing only our AMC Preferred Equity tradable units to our shareholders clarifies who is included in our current shareholder base,” he said in the statement. According to the Wall Street Journal, the company has faced unsubstantiated Internet conspiracy theories that say there are millions of synthetic AMC shares outstanding, as well as calls for a stock count.
The company, which issued an “I own AMC” NFT in January, will also issue an “I own APE” NFT to shareholders.
Speaking during a conference call to discuss the results, Aron said AMC has the flexibility to air more “Apes” in the future.
Now watch: How one investor applied the lessons of the meme stock frenzy to blockchain and NFTs
“I think all of this makes us much, and I mean much, stronger,” he added. The CEO, who referred to AMC’s critics as “naysayers” and “prophets of doom” on the call, said the dividend is very bad news for people who “don’t root for AMC.” .
AMC also reported its second-quarter results after the market closed, reporting a reduction in losses and revenue in line with analysts’ expectations. The movie chain reported a net loss of $121.6 million, or a net loss of 24 cents per share, compared with a net loss of $344 million, or a net loss of 71 cents per share, in the same period last year.
AMC’s sales in the second quarter 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 a spectacularly encouraging second quarter that boosts our spirits and brightens our outlook as we look forward,” Aron said in the statement. “Our results for the second quarter of 2022, in our minds, prove once again what we’ve been saying for a long time, that as Hollywood releases movies with broad consumer appeal, people will go to see in movie theaters in huge and surprising numbers.”
In the second quarter, AMC had 59 million people attend its theaters worldwide, up 168% from 22 million attendees in the same quarter a year ago, according to Aron. “So we’d like to extend a special ‘thank you’ to Dr Stephen Strange, Tom ‘Maverick’ Cruise, Elvis Presley and all those hungry man-eating Jurassic dinosaurs who graced our big screens over the term,” he added.
Shares of the meme-stock darling, which soared to a high of $72.62 on June 2, 2021, are down 29.7% this year. AMC shares closed up 2.47% at $18.66 on Thursday, well below their 52-week high of $52.79.
Wedbush analyst Alicia Reese was looking for positive second-quarter EBITDA for AMC amid an industry rally. Quality movies are returning to theaters, drawing crowds, he explained in a note earlier this week. “AMC is well-positioned to capture and retain greater market share than its pre-pandemic days as it enhances its footprint both domestically and internationally,” he wrote. “That said, theater exhibitors across the industry are spending more on marketing to bring patrons back to theaters, while also contending with major headwinds such as higher concession costs, higher utility costs and wages higher”.
Watch Now: AMC may have been a meme darling, but weakness in a few key areas puts the company on shaky ground
AMC, which describes itself as the world’s largest movie company, reported adjusted EBITDA of $106.7 million, compared with a loss of $150.8 million in the same period last year. Wedbush had forecast adjusted EBITDA of $16 million.
The company has been on a rollercoaster ride for the past two years that has taken the theater chain from pandemic victim beleaguered to a meme-stock phenomenon. AMC used the sharp rise in its stock price to tap the equity and debt markets, raising $917 million by January 2021. At the time, Aron said the new funding meant any talk of bankruptcy imminent “is completely off the table.”
Earlier this year, AMC surprised Wall Street when it earned $27. 9 million investment in Hycroft Mining Holding Corp. HYMC, +0.97% , a gold and silver mining company that operates well outside of AMC’s core business.
Speaking at the conference, Aron noted that Hycroft Mining has just announced its largest exploration program in about a decade. “We have every confidence that our investment in Hycroft will turn out, pardon the pun, to be quite lucrative for AMC,” he said. “I’m so convinced that when the story is finally written, it’s going to be a good one for AMC.”
However, AMC’s financial health remains a cause for concern, according to data from RapidRatings, a firm that rates the finances of public and private companies.
Of eight analysts surveyed by FactSet, three have hold ratings on AMC and five have sell ratings.