AMC Takes Advantage of Reddit Investor Hype

Posted on 06/03/2021

AMC Entertainment Holdings, Inc. (ticker: AMC) is a stock that is being widely traded, with trade halts both today and yesterday. AMC is the new darling for Reddit WallStreetBets traders. The investors reading Reddit helped push AMC stock up nearly 140% this week to an all-time high of US$ 62.55 on Wednesday.

AMC Entertainment said Thursday it plans to sell more than 11 million shares amid the trading frenzy. AMC shares fell 35% and was briefly halted for volatility. AMC shares were up more than 20% in premarket trading before news of the stock sale. AMC is a money-losing movie-theater chain has a market value of more than US$ 30 billion.

AMC says it raised about US$ 587.4 million in new equity capital. AMC says capital was raised at around US$ 50.85 per share.

According to an 8-K filing, “On June 3, 2021, AMC Entertainment Holdings, Inc. (the “Company”) entered into an equity distribution agreement (the “Equity Distribution Agreement”) with B. Riley Securities, Inc. and Citigroup Global Markets Inc. as sales agents (each, a “Sales Agent” and collectively, the “Sales Agents”), to sell up to 11,550,000 shares of Class A common stock, par value $0.01 per share, of the Company (the “Common Stock”), from time to time, through an “at-the-market” offering program (the “Offering”).

Subject to the terms and conditions of the Equity Distribution Agreement, the Sales Agents will use reasonable efforts consistent with their normal trading and sales practices, applicable law and regulations, and the rules of the New York Stock Exchange to sell the Common Stock from time to time based upon the Company’s instructions for the sales, including any price, time or size limits specified by the Company.

Each Sales Agent will receive a commission up to 2.5% of the gross sales price of the Common Stock sold through it as the Company’s Sales Agents under the Equity Distribution Agreement, and the Company has agreed to reimburse the Sales Agents for certain specified expenses. The Company has also agreed to provide the Sales Agents with customary indemnification and contribution rights. The Company is not obligated to sell any Common Stock under the Equity Distribution Agreement and may at any time suspend solicitation and offers under the Equity Distribution Agreement. The Equity Distribution Agreement may be terminated by the Company at any time by giving written notice to the Sales Agents for any reason or by each Sales Agent at any time, with respect to such Sales Agent only, by giving written notice to the Company for any reason.

The Company intends to use the net proceeds, if any, from the sale of the Common Stock pursuant to the Equity Distribution Agreement for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness, acquisition of theatre assets, working capital or capital expenditures and other investments.

The Common Stock will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-255546) filed on April 27, 2021 with the Securities and Exchange Commission (the “SEC”). The Company filed a prospectus supplement, dated June 3, 2021 (the “Prospectus Supplement”), to the prospectus, dated April 27, 2021, with the SEC in connection with the offer and sale of the Common Stock.”

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