AMC announces special dividend in the form of 'Ape' preferred shares; stock falls

AMC Entertainment Holdings Inc.’s stock fell more than 7% in extended trading on Thursday after the company announced a special dividend in the form of “Ape” preferred shares.

“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 fresh equity,” said AMC Chief Executive Adam Aron, in a statement. “As a result, this dramatically lessens any near-term survival risk for AMC, as we continue to work our way through this pandemic.”

Speaking during a conference call to discuss the results, Aron said that AMC has the flexibility to issue more “Apes” in the future.“I believe all of this makes us vastly, and I mean, vastly, stronger,” he added. The CEO, who referred to AMC’s critics as “naysayers” and “prophets of doom” during the call, said the dividend is bad news for people “not rooting for AMC.”

“AMC just completed a spectacularly encouraging second quarter that boosts our mood and brightens our prospects as we look ahead,” Aron said in a statement. “Our Q2 2022 results, in our minds, prove once again what we have long said, that as Hollywood releases movies with broad consumer appeal, people will flock to see them at movie theaters in huge and eye-popping numbers.”

Wedbush analyst Alicia Reese was looking for positive second-quarter EBITDA from AMC amid an industry rebound. Quality movies are back in theaters, drawing crowds back, she explained in a note earlier this week. “AMC is well-positioned to capture and retain higher market share than its pre-pandemic days as it improves its footprint both domestically and internationally,” she wrote.

The company has been on a roller-coaster ride over the past two years that took the theater chain from beleaguered pandemic victim to meme-stock phenomenon. AMC used the steep rise in its share price to tap into equity and debt markets, raising $917 million in January 2021. At that time, Aron said the new financing meant any talk of imminent bankruptcy “is completely off the table.”

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