AMC shares fall 14% after movie-theater chain announces $250 million stock sale

By James Rogers

The company wants to boost liquidity 'in light of the low first-quarter box office'

Shares of AMC Entertainment Holdings Inc. fell 14.3% in Thursday's session after the movie-theater chain and original meme stock filed to sell up to $250 million of stock.

The company announced the move in a regulatory filing, saying it plans to use the proceeds to bolster liquidity; to repay, refinance, redeem or repurchase its existing indebtedness; and for general corporate purposes.

"Among other reasons, the offering is being conducted to enhance the company's liquidity in light of the low first-quarter box office, resulting in part as previously disclosed from the Writers Guild of America strike and the Screen Actors Guild-American Federation of Television and Radio Artists strike that occurred during 2023, increased seasonal working-capital requirements, and the resulting cash burn the company has experienced," AMC said in the filing.

Earlier this week, AMC (AMC) Chief Executive Adam Aron said that the first part of 2024 will be "a slog" for the movie-theater chain, citing the ongoing impact of last year's Hollywood writers and actors strikes.

Related: AMC CEO says first part of 2024 'a slog to wade through'

"The impressive forthcoming movie slate gives me increasing confidence in the potential for a solid industry box office later in 2024 and in 2025. But the first part of 2024 is just a slog to wade through, given that the 2023 strikes delayed movie releases from early this year," Aron wrote on X, formerly known as Twitter, late Monday.

"As I have said before, cash is king. The smartest thing AMC did to survive during these past four turbulent years was to make sure we had corporate oxygen available to us, that oxygen for AMC of course being cash in the bank," he added.

"As noted during our last earnings call, AMC is focused on extending our debt maturities and ensuring that our cash reserves remain robust," Aron continued. "This is the recipe for success."

During the conference call to discuss AMC's fourth-quarter results last month, Aron highlighted the need for cash and pointed to the $418 million raised through the company's AMC Preferred Equity Units, which were converted to common stock in August 2023.

AMC's total cash and cash equivalents at the end of 2023 was $884.3 million, up from $631.5 at the end of 2022. The company's total debt including finance leases at the end of 2023 was around $4.56 billion, down from $5.01 billion at the end of 2022.

Related: AMC delivers revenue beat helped by Taylor Swift and Beyoncé, yet stock drops

In December AMC completed an at-the-market equity offering, raising approximately $350 million as it attempts to reduce its debt burden.

AMC shares registered their biggest daily percentage gain in a month Wednesday, but have seen a decline in recent months. The stock has fallen 39.2% this year, compared with the S&P 500 index's SPX gain of 10.2%.

-James Rogers

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03-28-24 1752ET

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