AMC Entertainment Holdings (AMC) - Get Report said Thursday that a group of investors including units of private-equity firm Silver Lake have opted to convert all $600 million of the cinema chain's 2.95% convertible senior notes due 2026 into stock at a price of $13.51 a share - taking advantage of its Reddit-driven surge.
Shares of AMC closed at $19.90 on Wednesday, up more than 300% from Tuesday alone following a wild ride that saw the stock more than quadruple since Monday after being carried higher by a wave of anti-short-selling momentum led by retail investors acting on banter on the Reddit message board, WallStreetBets.
Even before the Reddit-induced wave, investors were already betting on a comeback for AMC. The company’s shares soared on Monday after announcing that it had raised $917 million in debt and equity that it said takes bankruptcy "completely off the table."
As of Monday morning, AMC stock stood at $4.60, up 31.2%. In premarket trading on Thursday, the shares were initially up nearly 6% at $21.03 but quickly moved lower.
At last check, AMC stock was down 54.2% at $9.10.
The coronavirus pandemic and subsequent shutdowns have put movie-theater operators in a dark space financially, not only due to sudden and massive losses in revenue but also due to the runoff effect of more people streaming content directly.
Shares of AMC plunged last month after it filed with the Securities and Exchange Commission to offer as many as 50 million shares in an effort to stave off bankruptcy. That filing came on top of 200 million shares it filed for earlier in the month.
However, AMC repeatedly has raised capital throughout the pandemic to bolster its liquidity and stay afloat - something CEO Adam Aron on Monday said officially takes Chapter 11 off the table for the Leawood, Kansas-based company.
All told, AMC has raised $506 million of equity by issuing 164.7 million new shares. That is combined with a previously announced $100 million of additional first-lien debt and the issuance of 22 million new common shares to convert $100 million of second-lien debt into equity.
AMC had said it holds additional commitment letters for $411 million of incremental debt capital in place through mid-2023, unless repaid before then, through the upsizing and refinancing of a European revolving credit facility.
The $600 million share-conversion from Silver Lake will result in the issuance of 44.4 million new shares and reduce the company's debt by $600 million, AMC said.