See, AMC wanted to sell more shares and was shot down by investors. Maybe those investors didn’t want to be further diluted — AMC sold a lot of shares during the pandemic. But APE, the solution, isn’t just a nice marketing ploy to keep retail’s attention. It’s an end run around the investors who voted against more shares. After giving about 500 million shares of APE to investors, AMC can sell 4.5 billion units to the broader market, The Wall Street Journal reports.
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- This is where the comment on “a currency that can be used in the future to strengthen our balance sheet,” comes into play.
- Just ahead of earnings Thursday, the company announced it would issue a special dividend to investors of one AMC preferred Equity unit for each of AMC Class A common stock outstanding at the close of business on Aug. 15.
- As for the industry, the summer movie season has been busy, but Hollywood writers and actors are on strike.
- “The creation of a Preferred Equity Units (APE) class of stock once again provides AMC with dry powder to issue new shares for investment purposes. … The key question though from here is will future share issuances prove accretive or dilutive.”
- In short, AMC remains a speculative bet that holds a lot of risks.
For now, it looks like the movie theater company has delayed that outcome, thanks to some aggressive moves to stabilize its balance sheet. Investors aren’t sold on the strategy, however, and AMC stock has taken a beating. Unofficially, the distribution of APE shares in 2022 was effectively a 2-for-1 stock split. As noted, the company gave away one APE share for every one AMC share owned. While the two stocks had different tickers, they represented ownership in the same company. The stock dividend ultimately doubled AMC’s share count, just as a 2-for-1 stock split would.
What Is The APE Conversion?
Investments in T-bills involve a variety of risks, including credit risk, interest rate risk, and liquidity risk. As a general rule, the price of a T-bills moves inversely to changes in interest rates. Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment. fusion markets review The company expects to pay a dividend of about 517 million APE units later this month. The new class of shares has the same voting rights as existing common stock, the company said in a statement. Both common and preferred shareholders would weigh in equally on the two initiatives, which were bundled into one vote.
In simple terms, if you hold AMC shares as of the close on August 15, and hold those shares until the ex-dividend date, you will receive one APE share for each AMC share you hold. Shareholders should expect to receive their APE shares after markets close on Friday, August 19, with the company to begin trading on an ex-dividend basis August 22. This trading strategy invovles purchasing a stock just before the ex-dividend date in order to collect the dividend and then selling after the stock price has recovered. Investors got a taste of that market volatility as shares in AMC dropped eight percent after hours on Thursday, as the theater chain saw increasing attendance, but reported continued losses related to its unique investment strategies.
Vice Versa: How A $5.8 Billion Media Outfit Reversed Its Fortunes To Closing Shop
Additionally, APE units are preferred equity meaning they would be paid out first in a potential AMC bankruptcy. If anything APE units should be sold at a premium over AMC shares which is not the case currently as APE hovers around $6.60 and AMC trades around $9.35. The special dividend acts similar to a 2-for-1 stock-split where instead of receiving two AMC shares for each share held, investors received one APE share and retained their previous AMC share.
First, the company is treating the preferred equity unit as a dividend. In early 2021, AMC became a popular stock among retail investors, after the company appeared close to bankruptcy amid the pandemic fallout at movie theater chains. The stock surge helped the company strengthen its financial position, as executives seized upon it to sell shares and repurchase debt. AMC is approved to issue up to 1 billion APE units with its board able to authorize up to 5 billion. Currently the company has issued just over half of its approved preferred shares with the special dividend. AMC can sell more in order to raise cash or pay down some of its $10 billion in debt and long-term liabilities.
Releasing the APEs not only references how some of these investors refer to themselves, but also allows the firm to bypass the need to increase the number of common shares. AMC Entertainment (AMC) has fully embraced its meme popularity with the release of a special dividend called “APE” units. The AMC Entertainment Holdings Preferred Equity Units (APE) were dividended at the end of last week to AMC shareholders and have already risen nearly 10% from their $6 opening price. Banking services and bank accounts are offered by Jiko Bank, a division of Mid-Central National Bank.JSI and Jiko Bank are not affiliated with Public Holdings, Inc. (“Public”) or any of its subsidiaries. None of these entities provide legal, tax, or accounting advice.
Alternative Assets.Brokerage services for alternative assets available on Public are offered by Dalmore Group, LLC (“Dalmore”), member of FINRA & SIPC. “Alternative assets,” as the term is used at Public, are equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933 (as amended) (“Regulation A”). These investments are speculative, involve substantial risks (including illiquidity and loss of principal), and are not FDIC or SIPC insured.
Welcome to The Deep Dive, where we focus on providing investors of Canadian junior stock markets the knowledge they need to make smart investment decisions. We take a closer look at all data relating to organizations listed on the CSE and the TSX Venture to create quality stock analysis for investors. Learn more about dividend stocks, including information about important dividend dates, the advantages of dividend stocks, dividend yield, and much more in our financial education center. It’s all part of the club-like branding that Aron has envisioned for AMC and its investors.
Potential dilution
AMC said it is currently authorized to issue up to 1 billion APE units, and that it distributed a little more than half of that total with the dividend. AMC Entertainment Holdings Inc.’s stock fell more than 10% in extended trading on Thursday after the company announced a special dividend in the form ig group reviews of “Ape” preferred shares. In a reverse stock split, the share count drops and the share price rises. A 1-for-10 reverse split like AMC’s should slash the share count to 10% and add a zero to the stock price. “With the creation of APEs, AMC is deeply and fundamentally strengthening our company.
Roth Mkm and Citigroup both recently reiterated their sell ratings on the company, and Citigroup dropped its price target to $1.55. In February, a pension fund shareholder filed a class action lawsuit against AMC, claiming the company was staging an unfair voting process. AMC also reported its second-quarter results after market close, reporting a narrowing loss that beat expectations and revenue in line with analysts’ forecasts. The APE special dividend could help AMC cut its massive debt burden, according to analysts. Will it squeeze much higher on its first trading day on August 22nd, 2022? I have no idea but will definitely hold my APE shares through the dividend record date to see what happens.
Since the preferred shares grossly outnumbered the common shares, the vote would go in the direction that favored preferred shareholders—and specifically, Antara Capital. In what can be considered bad timing, AMC released its preferred stock class, called APE units, on Aug. 22. Some investors received APE units in the form of a dividend payout prior to the preferred class actually beginning to trade. Now, the class has officially begun trading, but it won’t be seeing immediate success due to the stock’s current volatility. What it really comes down to, is that the preferred share issuance is really a bet by management on retail investors not having the ability to understand that the APE shares are effectively dilution. Or, that issuing preferred shares down the road under a financing will at some point likely dilute AMC shares as well, based on the future plans already broadcasted by the company.
You may remember our friends at AMC, the theater chain with the pantless CEO, who’ve leaned all the way in on the meme stock thing. Hordes of enthusiastic retail investors maybe rescued AMC from crushing debt. Now AMC is hoping to tap them again to create more shares of the company. The etoro broker review company expects to issue a dividend of around 517 million APE units later this month. The new class of shares carries the same voting rights as the existing common shares, the company said in a release. The issuance of new shares raises concerns about dilution for existing shareholders.