AMC Entertainment Could Run Out Of Cash, CEO Says After Court Ruling; He Urges Stockholders “To Take Bankruptcy Risk Off The Table” Even As Shares Surge

CEO Adam Aaron said 235445519/">A court ruling on Friday makes it harder for AMC Entertainment to raise cash The financial stability of the circuit is seriously affected by – a Blowout ‘Barbenheimer’ Weekend Despite the box office and rising share price.

“The AMC should be in a position to raise equity capital. I repeat, to protect the shareholder value of AMC in the long term, we must be able to raise equity capital,” he wrote in an open letter to shareholders on Twitter (which was just renamed ‘X’). “This is especially the case now when the writers’ and actors’ strike has created additional uncertainty, which could lead to delays in the releases of films currently scheduled for 2024 and 2025.”

As things stand, he said, “there is an increased risk of the AMC running out of cash in 2024 or 2025, or the AMC being unable to satisfactorily refinance and extend the maturity of some of our loans” as it is due to start next year. “The risk of financial collapse is not a fad,” he warned Shareholders of Regal parent Cineworld wiped outIn the bankruptcy of that chain.

background: AMC’s army of vocal retail investors, which saved the chain from Chapter 11 during Covid, is wary of authorizing the company to issue new shares, as it would dilute their stake. That’s why Arron created APEs — AMC preferred equity units — that the company could issue (and sell) instead of common shares without authorization. But the price of APEs fell, making them less effective at raising money.

Shareholders voted in March to support the company’s proposal to liquidate the APES, convert them into common shares, and ultimately allow the AMC to sell the shares. But some stockholders filed suit in the Delaware Chancery Court to block the conversion. They agreed to a settlement with AMC shortly after, but the settlement fell under the same judge, who refused to approve it.

Arron acknowledged the dilution concern but said that “putting ourselves in a position to raise equity capital is more important.” This will make it more likely that first, we will survive, and then we will thrive. In my view, the wisest way to thwart that concise thesis is to remove bankruptcy risk to the extent possible. And we do this by being able to raise equity as and when required by the AMC.

He said that the AMC and the plaintiff in the case have modified the agreement. “If the court agrees, we expect to implement the plan approved at the AMC stockholders’ election in March as soon as possible.”

AMC stock is rising today at the weekend box office, but their shares began rising in late trading Friday following the court’s decision. The one-to-one conversion now presented was supported to convert APE to common shares. Monkey holder. APE is down 3%.

Aaron’s open letter: