Chairman / CEO of AMC Entertainment Inc. Adam Aron speaks on stage at the Will Rogers Pioneer of the Year Dinner 2018 at Caesars Palace during CinemaCon, the official convention of the National Association of Theater Owners, on April 25, 2018 in Las Vegas, Nevada .
Alberto E. Rodriguez | Getty Images
“Silverback” has spoken and he wants to issue more shares.
Adam Aron, CEO of AMC Entertainment, sat down with Trey Collins, owner of Trey’s Trades channel on YouTube, Thursday evening to answer questions from the company’s largest pool of investors.
The nearly hour-long interview gave Aron full access to Collins’s 280,000+ subscribers, many of whom own AMC shares. While Collins took this as an opportunity to ask Aron to clarify the company’s dealings with Mudrick Capital, the number of shares outstanding, and the short sellers betting against AMC, Aron used the platform to try to get the shareholders off it Convince the company that millions of new shares are in the best interests of AMC’s future.
“If you equip us with the tool – stocks as a tool – to find value-adding opportunities for AMC shareholders, we can do that,” said Aron. “If we are not armed with this tool, then you will tie our hands behind our backs and make it even more difficult for us to get hold of some of these attractive opportunities that we could all benefit from.”
Aron’s most recent attempt to convince investors to allow AMC to issue more shares comes just months after it failed to receive shareholder support for the addition of 500 million shares.
AMC executives have postponed their shareholders meeting from May to late July to allow more of their newer shareholders – who call themselves monkeys and named Aron their silverback – to attend the meeting. It has now revised its strategy. The latest proposal, unveiled Thursday, calls on shareholders to allow AMC to issue up to 25 million more shares. If approved, the company will not be allowed to sell any of these stocks until 2022.
Aron reiterated that the company is looking at a number of acquisition opportunities, including purchasing several ArcLight and Pacific theater locations that closed during the pandemic using funds from stock sales.
He also said the money could be used to pay off debts, cut interest costs, or pay off millions in unpaid rents.
Last week, AMC sold 20 million shares in two separate transactions, raising approximately $ 800 million in cash. The first transaction involved Mudrick Capital, which paid more than $ 230 million for 8.5 million shares. Then AMC announced Thursday that it had sold an additional 11.5 million shares for $ 587 million.
The most recent share sale made for a wild trading day for the stock on Thursday. The stock closed nearly 18% at $ 51.34. In extended trading, the stock fell another 7%.
Aron said the 20 million shares were originally intended to be turned over to senior management at AMC, but the company decided to sell the stock to “strengthen the company.”
“Between these two transactions we raised over $ 800 million in cash, not to fill my pocket or anyone who works at AMC, but to put that money in AMC’s till to strengthen AMC and AMC to do more good to make the company grow. ” ,” he said.
Aron said AMC used stock sales to raise funds for months and without those additional stocks the company would not have avoided bankruptcy.
As evidence of this, Aron referred to the sale of around 200 million new shares in December, for which the company raised around 844 million dollars.
“That single act of stock dilution saved the company and made the company a stronger company,” he said.
The company sold an additional 43 million shares in May for $ 428 million in cash.
“We thought we knew we were diluting the number of stocks, but we believe that $ 428 million in cash has strengthened AMC a lot,” he said.
Between January and May, AMC raised approximately $ 1.6 billion in cash from these stock sales, Aron said. As of June 2, the company has approximately 501 million shares outstanding and approximately 46,000 shares remaining for future issuance.
“Shareholders should authorize more shares,” said Aron, “because this could be a very valuable tool in building this company in the future and growing this company in the future.”