AMC Stock Heads For Worst Day In Nearly Three Years – But Retail Says Debt Paydown Offers Silver Lining

AMC is set to sell 95.25 million shares of common stock in a registered direct offering to raise $200 million.

• The per-share value adds up to roughly $2.10, a 24% discount to the stock’s closing price on Monday.
• The company said it plans to use the proceeds primarily to redeem all of its $125.5 million outstanding 6.125% Senior Subordinated Notes due 2027.
• Remaining funds could be used for general corporate purposes, including repaying other debt and strengthening cash reserves.

Shares of AMC Entertainment Holdings (AMC) crashed 27% in early trading on Tuesday after the theatre chain operator announced that it entered into an agreement with institutional investors to raise around $200 million at a steep discount.

AMC stock clocked its biggest single-day loss since September 2023.

AMC’s Offering At 24% Discount

AMC is set to sell 95.25 million shares of common stock to raise the $200 million. This is part of a registered direct offering. The per-share value adds up to roughly $2.10, a 24% discount to the stock’s closing price on Monday.

The company has roughly 752.2 million outstanding shares, according to Koyfin data.

The company said it plans to use the proceeds primarily to redeem all of its $125.5 million outstanding 6.125% Senior Subordinated Notes due 2027. Remaining funds could be used for general corporate purposes, including repaying other debt, strengthening cash reserves, and investing in initiatives to improve the moviegoing experience at AMC theatres. The transaction is expected to close on June 24.

This offering is a part of a share sale program under an existing shelf registration statement filed with the SEC in February this year. The company said it could sell shares of Class A common stock, preferred stock, subscription rights, depositary shares, warrants and units, in amounts, at prices and on terms determined at the time of offering.

Wall Street Bullish On AMC’s Prospects

Earlier this month, B. Riley raised the stock’s price target to $2.25 from $2 and kept a ‘Buy’ rating, according to The Fly. The outlook has improved thanks to stronger-than-expected domestic box office performance in May and growing confidence in second-quarter results.

While continued box office momentum, progress in theatrical release windows, and potential benefits from guild contract renewals could provide additional upside, much of that optimism appears already priced into valuations, the analyst said.

Retail Bullish On AMC’s Debt Reduction

Retail sentiment surrounding AMC on Stocktwits turned ‘bullish’ from ‘extremely bullish’ a day earlier, while message volumes surged by 225% over a 24-hour period.

One user said that while dilution can be frustrating, removing debt and institutional buying is a net positive for the stock.

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Another user expects the stock to rally after the company wipes out debt.

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The stock has gained around 20% so far this year.

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