AMC Entertainment Holdings plans to sell stock but warns investors of losses

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AMC Entertainment Holdings Inc. plans to sell shares less than three weeks after getting court approvals that opened the door for the movie theater operator to raise money to pay down its debt.

The company filed on Wednesday plans to sell up to 40 million shares of its common stock as part of its recent equity distribution agreement that allows it to sell about 390 million new common stock, worth about $4.2 billion at current prices. AMC shook up its structure late last month, converting preferred shares into common stock and implementing a 10-to-1 reverse stock split after a lengthy court battle where some common stockholders had tried to block the move.

Proceeds from the sale will be used to improve liquidity, refinance and repay loans, the filing said. AMC has $9.5 billion of debt and lease obligations, according to data compiled by Bloomberg. The fundraising is expected to further dilute shareholders.

Shares sank as much as 21% to $10.73 Wednesday, bringing losses in the past year to 87%.

AMC cautioned investors against buying shares in its filing, highlighting the fluctuations in its price and trading volumes this year and noting that its stock is “highly speculative and involves risk.”

Investors should be “prepared to incur the risk of losing all or a substantial portion of your investment,” the filing said in bold lettering.

AMC became a favorite of retail investors during the pandemic, with its shares surging more than 2,800% between the end of 2020 and June 2, 2021, even as many consumers avoided cinemas.