Analyst Says AMC Theatres’ Reverse-Stock Split, Improved Theatrical Slate Bodes Well For Exhibitor
March 14, 2023
AMC Entertainment shareholders March 14 approved a 1/10 reverse-stock split, reducing the number of outstanding common shares to 51.8 million from about 518 million. The world’s largest theatrical exhibitor’s controversial 930 million AMC Preferred Equity (APE) shares will convert to 93 million AMC common shares, resulting in 145 million total shares outstanding effective the date of conversion, when APE shares will no longer trade.
“I would like to commend our shareholders for the wisdom exhibited in your votes by approving these proposals, and doing so by a wide margin,” CEO Adam Aron said in a statement following the vote.
AMC began issuing special APE dividends last August in an effort to attract investors to help reduce its massive $12 billion debt load — much of it accrued during the pandemic when its theater operations ground to a halt.
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Some common share holders have not approved of APEs, contending the dividends dilute their shares’ value. In February Allegheny County’s (Pa.) pension fund sued AMC, alleging that the APEs circumvented AMC common shareholders’ will to not further dilute shares. The case is set to go to trial April 27.
Going forward, AMC has the authorization to issue up to 550 million additional common shares, which could generate upwards of $11 billion, according to Wedbush Securities media analyst Michael Pachter.
“We expect AMC to continue raising cash with its equity while chipping away at its massive debt balance,” Pachter wrote in a note.
Meanwhile, the analyst is buying into Aron’s optimism regarding the 2023 theatrical slate, which began with February’s Ant-Man and the Wasp: Quantumania, and features upcoming releases John Wick: Chapter 4 (Lionsgate); Universal Pictures’ The Super Mario Bros. Movie; Disney’s The Little Mermaid and Marvel Studios’ Guardians of the Galaxy Vol. 3; Sony Pictures’ Spider-Man: Across the Spider-Verse; Paramount Pictures’ Dungeons & Dragons: Honor Among Thieves and Transformers: Rise of the Beasts; and Warner Bros. Pictures’ The Flash, among others.
Regardless, AMC saw revenue decline 15% to $990.4 million in the most-recent fiscal period, from $1.17 billion in the prior-year period. The company’s net loss rose to $287 million, up from a loss of $134.4 million a year earlier.