AMC Entertainment AMC moved higher Tuesday after the group scrapped plans to have shareholders approve a planned capital increase that would have diluted existing stockholders.
AMC said it would remove a proposal to increase its planned share sales from 525 million to around 550 million, and won't seek approval for anymore issuance until at least 2022, following what CEO Adam Aron described as a 'split' in opinion among the company's retail investor base.
AMC had been seeking approval to sell 25 million shares at some point next year in order to fund potential 'value creating' investment opportunities.
Aron said the 25 million request was a "more measured proposal" than the 500 million share request floated earlier this spring, which Aron said at the time would bolster the group's cash reserves and help reduce its debt load.
AMC shares were marked 1% higher in early trading Tuesday to change hands at $52.52 each.
The move follows the launch last month of an initiative called "AMC Investor Connect," a portal that will allow its 3.2 million retail investors to 'self-identify' as stockholders and receive what the company calls 'special offers' and updates.
AMC said at the time that, following the exit China-based Wanda Group, no single entity has an ownership stake of more than 10%.
AMC has also cautioned that investors must be prepared to "lose all, or a substantial portion" of their holdings in the movie theatre chain given the stock's recent volatility, which it said in an Securities and Exchange Commission filing is "unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last."
TheStreet's founder, Jim Cramer, has argued the case for AMC's capital raising, however, saying earlier this week that "what Adam Aron is doing is brilliant ... he's growing the company and has shares he can offer to buy any theatre chain in the world and I think he's going to do that."