AMC Entertainment Holdings Inc. saw a notable 13.4% drop in premarket trading on Thursday after revealing plans to sell up to $250 million of its stock. This move, outlined in a filing, underscores the company’s strategy to shore up its financial position.
AMC aims to use the proceeds for various purposes, including enhancing liquidity, addressing existing debts, and supporting corporate initiatives.
The decision to offer additional shares comes amidst several factors, such as the lackluster performance of the box office in the first quarter, partly due to the fallout from the Writers Guild of America strike and the Screen Actors Guild-American Federation of Television and Radio Artists strike in 2023.
Also, heightened seasonal working capital needs and increased cash burn have prompted this action.
Earlier this week, Adam Aron, CEO of AMC, acknowledged the arduous journey the company has faced in the first part of 2024, describing it as “a slog.”
He attributed this difficulty to the ongoing repercussions of the Hollywood writers’ and actors’ strikes from the previous year, which caused delays in the release of movies scheduled for early 2024.
In a statement shared on X (formerly Twitter), Aron stressed the critical significance of liquidity, emphasizing it as the cornerstone of AMC’s resilience during tumultuous times.
He spotlighted the company’s cautious strategy in maintaining a strong cash position, which has played a pivotal role in steering through challenging periods.
During the latest earnings conference, Aron reaffirmed AMC’s dedication to prolonging debt maturities and maintaining ample cash reserves.
He underscored the effectiveness of prior strategies, such as the conversion of AMC Preferred Equity Units into common stock in August 2023, which played a pivotal role in strengthening the company’s financial position.
