AMC Entertainment Preferred Shares Get a Permanent Place in the Company’s Share Count
Last week, the theater chain issued preferential units as a special dividend payment. They rank above common stock but below debt in its capital structure and would therefore receive payment first in case of bankruptcy proceedings.
Pension funds and investors who allegedly believe the settlement shortchanges AMC shareholders are challenging the agreement in court; AMC CEO Adam Aron counters by maintaining it is necessary in order to secure new financing.
What is APE Stock?
AMC Preferred Shares will become permanent members of its share count after shareholders approved converting them into common stock with an accompanying one-for-ten reverse share split.
This action will reduce AMC’s total outstanding shares by approximately 1.25 billion, providing access to additional capital funding without diluting existing shareholders too much and helping AMC avoid an ongoing lawsuit filed by amateur investors who participated in its meme stock rally last year.
This conversion should not cause more dilution than would occur through a typical 2-for-1 stock split, yet investors should expect that its process may have some adverse impact on AMC’s stock price.
What is APE Companies’s business model?
APE Companies generates revenue through primary sales of non-financial trading tokens (NFTs, such as its recent Mutants and Kennel drops) as well as residual revenue generated from secondary sales on platforms like Rarible and OpenSea. They also sell merchandise featuring their iconic characters – like sneaker shoes and hoodies!
NFTs have proven popular with speculators because they can be traded without meeting regulatory requirements, such as registering the company trading them or reporting income. Yet some investors have voiced concern over trading these assets on unregulated exchanges due to potential security violations and fraud risks.
AMC’s attempt at monetising its meme stock with APEs may be seen as a last ditch effort to stave off bankruptcy. The theater chain has been struggling to raise cash to pay down its $5 billion debt burden due to Covid-19 regulations and other factors.
Who are APE Companies’s investors?
AMC Preferred Equity units, traded on the New York Stock Exchange and unrelated to AMC’s other shares in its capital structure. If necessary, AMC reserves the right to sell off these APE units if it so desires, while these APE shares will have priority over common stock in case of bankruptcy proceedings.
APE units are intended to help AMC raise capital without diluting existing shareholders, since AMC already sold millions of common shares during pandemic; investors voted against further sales.
So the APE share issue was an attempt at solving this problem; but its effectiveness remains uncertain; if AMC continues to have difficulty filling seats, this move won’t save it.
What is APE Companies’s latest funding round?
On Friday, AMC Entertainment shares surged after a judge denied a lawsuit that would have forced it to convert its controversial APE preferred units into common stock. Each APE share represents one preferred share worth one hundred class A shares; AMC issued these APE units last year, including 30% to Antara Capital LP creditor Antara Capital LP; however they have since traded at steep discounts relative to class A shares.
Axios has learned that Andreessen Horowitz will lead a major funding round for Yuga Labs, the Miami-based firm behind the Bored Ape Yacht Club non-fungible token (NFT). Their iconic virtual monkeys have long been loved and loathed alike; now this deal will put Yuga Labs at a $4 billion valuation while giving the company another path for raising cash.
Where is APE Companies’s headquarters located?
APE Companies’ headquarters is in Deer Park, Texas; additional locations are in Pasadena and Los Angeles, both located within Texas.
2021 was the year of meme stocks, as people who’d never invested before took an interest in investing. AMC, the movie theater chain, became an especially popular selection; but as pandemic struck, AMC stock plummeted, forcing CEO Adam Aron to make some difficult choices.
To stabilize AMC’s share price, he hired Trey Collins – a self-declared “ape investor”. Through YouTube videos he encouraged fellow apes to keep hold of their shares, alleging that hedge funds were using synthetic shares to dilute its value; but government regulators found no evidence of that happening; there’s no sign that hedge funds are buying AMC shares at all.