AMC Entertainment Holdings Inc (AMC)

[Prudent Capitalist]

AMC's APE conversion a 'massive' opportunity to wipe out debt and drive expansion, says analyst

12:15 pm ET January 30, 2023 (MarketWatch)

Movie-theater chain and meme-stock darling is taking aim at its massive debt burden

A previous version of this story included an incorrect figure for the amount of debt AMC had at the end of its fiscal third quarter. The correct figure is $5.325 billion.

AMC Entertainment Holdings Inc.'s push to convert its AMC preferred equity units, or APEs, into common stock is a massive opportunity in the company's battle to eliminate debt, according to B. Riley Securities analyst Eric Wold.

In an SEC filing Friday, the movie-theater chain and meme-stock darling announced a special meeting of shareholders to increase the number of AMC (AMC) authorized shares from just over 524 million to 550 million and authorize a 1-for-10 reverse split of the company's common stock, converting APEs into shares of common stock.
. . . .
"Assuming the current AMC stock price holds into the vote, the reverse stock split would open the door to roughly $22 [billion] in equity capital," Wold wrote on Monday. ...

"With our projection that AMC is unlikely to turn [free-cash-flow] positive until 2024 with multiple tranches of debt set to mature in the coming years within a higher interest rate environment, we believe debt reduction is top of mind with management. We suspect the opportunity to raise billions of dollars in equity provides that path," Wold wrote.

"If either proposal fails, there is no conversion of APE units into AMC common shares and, we would suspect, APE units could potentially decline to price levels at the time before the announcement on December 22 -- or below $1.00," the analyst added.