Thomas BabychanShares of AMC Entertainment Holdings, Inc, declined by more than 10% during extended trading hours on Thursday, soon after the theatre chain made an announcement regarding a special dividend for shareholders.
AMC Entertainment Holdings Inc, founded in 1920 is currently one of the largest theatre chains in the United States of America with more than 10500 screens across 940+ theatres.
The company, which is currently listed on New York Stock Exchange as AMC, announced that it will distribute a special dividend in the form of preferred shares named “Ape”. The word “APE” on shares is kind of a tribute to investors who turned the entire stock into a meme stock. The investors of AMC Entertainment Holdings, usually call themselves “Apes” or “Apenation”.
According to various stock analysts news reports, AMC Entertainment had to come to the decision of distributing preferred shares as the shareholders of the company were not willing to give permission to issue common shares.
The company also detailed how it is going to issue the special dividend in preferred shares. One preferred equity of AMC Entertainment would be distributed as a special dividend to each share of AMC Class A common stock. The preferred equity would only be apportioned to such Class A common stock, which has a par value of 0.01 dollars per share and is outstanding as of August 15th (business closing time).
The payment of special dividend by the company is expected to occur by the end of business hours on August 19th 2022.
The majority shareholders of the company are Wanda Group, a Chinese multinational conglomerate, Silver Lake Partners, a US based private equity firm and AMC Entertainment Holdings themselves.
CEO’s Take on Preferred Equity
Chief Executive officer of AMC Entertainments, Adam Aron, on Thursday, released a statement in which he stated that the new AMC Preferred Equity provides the company with an asset similar to currency. According to Aron, the same preferred equities if AMC can be used in future for various financial activities such as paying down debt and for raising fresh equity to name a few. It can also be used to strengthen the balance sheet of the company, which underwent serious economic challenges during Covid-19 period.
Aron added in his statement that move by the company to issue preferred equity, also reduces any short term survival risks of the theatre chain.
Statement also mentioned that the APE dividend would be distributed by the entertainment company to nearly 516,820,595 outstanding shares.
Second Quarter performance
AMC Entertainments Holdings Inc few days ago released its earning reports for the second quarter which ended in June 2022. According to the reports, the theatre chain posted a net loss of 121.6 million dollars during the three months. In Quarter 2 of last financial year, the company posted a net loss of 344 million dollars.