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AMC stock price falls after conversion green light

Aug 14, 2023
Illustration of a theater stage, with a dollar bill printed on the curtains.

Illustration: Brendan Lynch/Axios

AMC's stock price was crashing Monday morning after the theater company finally got the green light to convert its AMC Preferred Equity units into common shares, a move that will dilute existing holders.

Why it matters: The stock conversion will allow AMC to raise more cash, which CEO Adam Aron has said multiple times is essential to avoiding bankruptcy.

Driving the news: On Friday, a Delaware judge approved AMC's revised settlement plan with some of its shareholders over the stock conversion.

  • The stock conversion will convert nearly 1 billion outstanding APE shares into common shares, which will push the theater company's total share count north of 1.5 billion.
  • AMC's shares were down more than 35% Monday morning, while APE shares had risen 16%.
  • As part of the conversion, AMC will executive a 1 for 10 reverse stock split to maintain its share price.

The big picture: Despite an improved box office this year buoyed by the runaway success of "Barbenheimer," AMC still faces a cash crunch.

  • AMC's cash balance during the second quarter of this year was $435.3 million, a drop of 12% from last year.
  • AMC has nearly $5 billion in debt that needs to be paid next year.
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