AMC Theatres tries to keep the apes in line
The Future. After investors blocked AMC from creating new shares in the company, CEO Adam Aron announced a special dividend called AMC Preferred Equity units… aka “APE.” But shareholders are seeing through the pandering, which is tranquilizing AMC’s stock, just as moviegoing rebounds and entertainment conglomerates remember how good a business theatrical is. Maybe retail traders are only invested in underdogs…
THR reports that the apes have turned on “The Silverback.”
- In its quarterly earnings call last week, Aron announced that every AMC shareholder would receive a special dividend nicknamed “APE.”
- The company will give out over 516 million APE shares for free (the same number of AMC shares in existence).
- APE will go public on the New York Stock Exchange on August 22, giving holders (and retail traders) who propped AMC’s stock over the past 18 months another asset to bet on.
The dividend gives AMC a backdoor to raising more money — a crafty move by Aron after shareholders voted down his plan to create more stocks, fearing the move would dilute their holdings.
How could that happen? Despite the hundreds of millions in free APE shares that the company just released to holders, AMC also has the ability to create an additional 4.5 billion shares to sell to the public.
Gorilla on display
Unfortunately for AMC, shareholders aren’t buying the APE plan, sending the company’s stock down 8%. Where has all the love gone?
- Despite a year in which theatrical moviegoing has bounced back, and AMC’s financials are on the up and up, retail traders haven’t been happy with Aron selling off his “personal” stock.
- They’re also confused by the company’s odd investments, like buying a $28 million stake in Hycroft Mining.
In the call, Aron tried to explain these maneuvers, saying that he still owns $15 million in company stock and has “more than a $50 million economic stake in AMC.” But despite a year of appeasing the traders, Aron may be learning it doesn’t always pay to be meme king.