(Reuters) – Silver Lake has revealed on Friday that it has sold its stake in AMC Entertainment Holdings for $ 713 million this week, capitalizing on a 10-fold increase in share prices, while traders organizing on social media platforms like Reddit caught them up.
The transaction puts Silver Lake and its co-investors in the dark following a $ 600 million investment in convertible bonds that the private equity firm made in AMC in 2018. Such a result seemed unlikely when AMC, the The world’s largest chain of cinemas is struggling to take over bankruptcy last summer, a move it avoided thanks to a debt restructuring deal with Silver Lake and its creditors.
Silver Lake was able to turn bonds into equities thanks to the rally that pushed AMC shares above the bond’s conversion price this week.
AMC shares fell 70% in 2020 to close the year at $ 2.12, as many of the company’s cinemas closed or operated at low capacity during the COVID-19 pandemic.
But the stock closed Wednesday at $ 19.90, as traders targeted very short-circuited stocks, such as AMC and GameStop Corp. Silver Lake sold its stake in several open market transactions that day, according to regulatory documents.
The sale makes Silver Lake the latest investment firm to cash in this week’s unprecedented rally on short stocks. The Ontario teachers’ pension plan sold $ 497.4 million worth of shares it owned to US mall owner Macerich Co this week, regulatory documents said.
AMC itself capitalized on the rally. It raised $ 304.8 million by selling shares this week. He is considering new measures to raise capital by selling shares, sources told Reuters on Thursday.
Joshua Franklin’s report to Miami; Editing by Leslie Adler