AMC faces rally to sell shares, but misses an even bigger payday

(Reuters) – AMC Entertainment Holdings Inc. on Wednesday said it raised $ 304.8 million by selling shares during an unprecedented social media rally in its shares, although the U.S. film firm could have grown by about four times more, waiting for another day.

AMC was forced to raise capital to stay afloat after its ticket sales fell 80 percent following the coronavirus outbreak. It eliminated bankruptcy last year thanks to a debt restructuring agreement with its creditors and private equity firm Silver Lake.

Shares of AMCs in Leawood, Kansas, rose 41 percent cumulatively on Monday and Tuesday, as amateur investors, many of them online at forums like Reddit’s WallStreetBest, decided to take over hedge funds in the absence of stock.

AMC revealed on Wednesday that it sold shares worth $ 304.8 million on Monday and Tuesday, at an average price of $ 4.81 per share.

However, the company’s shares rose to 310% on Wednesday as speculative frenzy intensified. They closed at $ 19.90 per share, about 301% higher that day. If AMC had sold the same number of shares at that price, it would have raised $ 1.26 billion.

Although AMC may decide to sell more shares in the coming days, the money it has left on the table shows how the speculative rally of recent days in sharply shortened stocks, especially those of video retailer GameStop Corp, presents both an opportunity and a challenge. for companies.

An AMC spokesman did not respond to a request for comment.

AMC, which also operates British cinemas Odeon, said on Monday that it had already raised enough money to rule out a potential bankruptcy. Through a combination of debt and equity issues, it has raised $ 917 million since mid-December to help cushion the pandemic.