Market Overview

AMC To Raise $70M From Fresh Equity Issue

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AMC To Raise $70M From Fresh Equity Issue

The largest movie theatre chain in the U.S., AMC Entertainment Holdings Inc (NYSE: AMC) is issuing 20 million shares to raise $70 million in gross proceeds, the company said in an SEC filing.

What Happened: The decision to issue fresh capital is spurred by the news of a potential COVID-19 vaccine, coupled with the recent jump in its stock price, as per Bloomberg.

AMC has engaged Goldman Sachs Group Inc (NYSE: GS) and B. Riley Financial Inc (NASDAQ: RILY) as the book-runners.

The fresh issue is part of AMC’s At-The-Market (ATM) equity program. 

On Monday, AMC stock opened at $4.30, approximately 73% higher than Friday’s closing price, after potential vaccine news. In the first week of November, the shares gained roughly 15.8%, despite reporting a 90% drop in Q3 revenues on Nov 3.

Why Does It Matter: The theatre chain faced an imminent cash crunch due to pandemic-enforced lockdowns. Based on the CFO’s forecasted cash burn rate of $100 million a month, the company’s cash reserves of $430 million would have lasted just for four months.

The company is also exploring other alternative strategies like offering private theatre rentals for an audience of up to 20 people. AMC claims to have received over a significant number of inquiries in four weeks during the initial beta launch.

Price Action: After a 6.9% drop on Tuesday, AMC shares are down by 1.71% to $3.45 in the pre-market session Wednesday.

Image Courtesy: Wikimedia

 

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