AMC CEO Adam Aron calls for support for 25 million share issuance plan
AMC Entertainment Inc. President and CEO Adam Aron speaks onstage at the 2018 Will Rogers Pioneer of the Year Dinner at Caesars Palace at CinemaCon, the official convention of the National Association of Theater Owners, on April 25, 2018 in Las Vegas, Nevada.
Alberto E. Rodriguez | Getty Images
“Silverback” has spoken, and he wants to issue more shares.
AMC Entertainment CEO Adam Aron spoke to Trey Collins, the owner of Trey’s Trades on YouTube, on Thursday evening to answer questions from the company’s largest pool of investors.
the maintenance of almost an hour gave Aron unrestricted access to more than 280,000 Collins subscribers, many of whom own AMC shares. While Collins took the opportunity to ask Aron to clarify the company’s relationship with Mudrick Capital, its number of outstanding shares, and the short sellers betting against AMC, Aron used the platform to try to persuade shareholders that allowing the company to issue millions of new shares was in the best interests of AMC’s future.
“If you arm us with the tool – that is, stocks as a tool – to find opportunities to create value for AMC shareholders, we can do it,” said Aron. “If we are not armed with this tool, then you tie our hands behind our backs and make it difficult for us to seize some of these attractive opportunities that could benefit us all.”
Aron’s latest attempt to convince investors to allow AMC to issue more shares comes just months after it failed to garner shareholder support to add 500 million shares.
AMC executives have postponed its shareholders’ meeting to late July from May in a bid to allow more of its new shareholders – who call themselves monkeys and have named Aron as their silverback – to attend the meeting. meeting. During this time, he reshuffled his strategy. Her new proposal, which she unveiled on Thursday, asks shareholders to authorize AMC to issue up to 25 million additional shares. If approved, the company would not be allowed to sell those shares until 2022.
Aron reiterated that the company is examining several acquisition opportunities, including the purchase of several The locations of ArcLight and Pacific theaters that were closed during the pandemic, and would use the funds raised through the sale of shares to do so.
He also said the money could be used to pay off debt, reduce interest charges, or pay off millions of unpaid rents.
Over the past week, AMC sold 20 million shares in two separate transactions, generating roughly $ 800 million in cash. The first transaction involved Mudrick Capital, which paid over $ 230 million for 8.5 million shares. Then AMC revealed on Thursday that it had sold 11.5 million additional shares for $ 587 million.
The last share sale was on a wild trading day for the stock on Thursday. The stock closed nearly 18% lower at $ 51.34. In prolonged exchanges, the title lost another 7%.
Aron said the 20 million shares were initially intended to be turned over to AMC’s management team, but the company decided to sell the shares in order to “strengthen the business.”
“Between those two deals, we raised over $ 800 million in cash, not to fill my pocket or for anyone who works at AMC, but to put that money into AMC’s treasury to strengthen AMC and let AMC do it. more good stuff, growing the business, ”he said.
Aron said AMC has been using stock sales to raise funds for months and that without the extra shares the company would not have avoided bankruptcy.
Aron pointed to the sale of around 200 million new shares in December, for which the company raked in around $ 844 million, as proof of this.
“This one act of diluting the shares saved the company and made the company a stronger company,” he said.
The company sold an additional 43 million shares in May, bringing in $ 428 million in cash.
“In our opinion, yes, we knew we were diluting the number of shares, but in our opinion, that $ 428 million in cash made AMC significantly stronger,” he said.
Between January and May, AMC raised about $ 1.6 billion in cash from those share sales, Aron said. As of June 2, the company had approximately 501 million shares outstanding and approximately 46,000 shares remaining for future issuance.
“Shareholders should authorize more shares,” said Aron, “because it could be a very valuable tool in building this company in the future and growing this company in the future.”