AMC Entertainment Slides as CEO Aron Hints at New 500 Million Share Sale

'There are a lot of benefits to our shareholders of having more authorized shares out on the market,' AMC CEO Adam Aron tells CNBC Thursday.
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AMC Entertainment  (AMC) - Get Report traded lower Thursday after CEO Adam Aron said the movie-theatre chain may sell 500 million new shares to bolster its balance sheet.

Aron told TheStreet's founder, Jim Cramer during CNBC's Squawk Box program that his company has been able to navigate its way through the coronavirus pandemic by raising $2.8 billion in cash, as well as another $1 billion in concessions from theatre owners and landlords, noting the company was close to going out of business "five different times last year".

However, he said that now that the group is back and operating in normal conditions, AMC could look to raise even more cash and capitalize on the stocks' Reddit-fueled rally that has added billions to its overall market value.

"Dilution is something we care about, but I will say we are formally asking approval from our shareholders to authorize another 500 million new shares that the company could issue if it wishes," Aron said. "There are a lot of benefits to our shareholders of having more authorized shares out on the market."

"We'll be sensitive to dilution issues, but at the same time there's an opportunity to bolster our cash reserves and there's an opportunity to buy back debt at a discount or pay deferred theatre rents," he added. "There are a lot of good reasons for shareholders to give us the authority."

AMC shares were marked 3.2% lower in early morning trading Thursday to change hands at $9.88 each, trimming their one-month gain to around 8%.

Last month, AMC posted a narrower-than-expected fourth quarter loss of $328 million -- and $4.6 billion for the year -- but noted that the nation's accelerating vaccination rate, which topped 100 million over the weekend, will boost AMC attendance and bolster its top and bottom lines.

The group is also planning to capitalize on its recent 'Reddit Rally', which has lifted its stock nearly five-fold since late January, to issue another 500 million shares in order to pay down debt or slow its cash burn rate.