Chairman/CEO of AMC Entertainment Inc. Adam Aron speaks onstage during the 2018 Will Rogers Pioneer of the Year Dinner at Caesars Palace during CinemaCon, the official convention of the National Association of Theatre Owners, on April 25, 2018 in Las Vegas, Nevada.
Alberto E. Rodriguez | Getty Images
“Silverback” has spoken, and he wants to issue more stock.
AMC Entertainment CEO Adam Aron sat down Thursday night with Trey Collins, host of the Trey’s Trades channel on YouTube, to answer questions from the company’s largest pool of investors.
The nearly hour-long interview offered Aron unrestricted access to Collins’ more than 280,000 subscribers, many of whom are owners of AMC stock. While Collins used this as a chance to ask Aron to clarify the company’s dealings with Mudrick Capital, its outstanding share count and the short sellers who are betting against AMC, Aron used the platform to try to persuade shareholders that allowing the company to issue millions of new shares was in the movie theater company’s best interest.
“If you arm us with the tool — meaning stock as the tool — to go find value-creating opportunities for AMC shareholders, we can do that,” Aron said. “If we are not armed with this tool, then you’re tying our hands behind our back and you’ll make it just that much harder for us to land some of these attractive opportunities that could benefit us all.”
Aron’s latest push to persuade investors to allow AMC to issue more stock comes just months after it failed to gain shareholder support to add 500 million shares.
AMC executives postponed its shareholder meeting until late July from May in an effort to allow more of its newer shareholders — who call themselves apes and have anointed Aron as their silverback — to attend the meeting. Meanwhile, it has been revamping its strategy. Its newest proposal, which it unveiled Thursday, asks shareholders to allow AMC to issue up to 25 million more shares. If approved, the company would not be allowed to sell any of that stock until 2022.
Aron reiterated that the company is looking at several acquisition opportunities, including buying ArcLight and Pacific theater locations that were shuttered during the pandemic, and would use funds raised through stock sales to do so.
He also said the cash could be used to pay down debt, reduce interest costs, or pay off millions in unpaid rent.
In the last week, AMC has sold 20 million shares in two separate deals, generating around $800 million in cash. The first transaction involved Mudrick Capital, which paid more than $230 million for 8.5 million shares. Then, AMC revealed Thursday that it had sold an additional 11.5 million shares for $587 million.
The latest stock sale made for a wild trading day for the stock Thursday. Shares closed down nearly 18% at $51.34. In premarket trading Friday, the stock was down 7.4%.
Aron said the 20 million shares were initially intended to be given to AMC’s upper management team, but the company decided to sell the stock to “strengthen the company.”
“Between those two transactions we raised over $800 million of cash, not to line my pocket or anybody who works at AMC, but to put that money in the treasury of AMC to strengthen AMC and let AMC do more good things, to grow the company,” he said.
Aron said AMC had been using stock sales to raise funds for months and without these additional shares, the company would not have avoided bankruptcy.
Aron pointed to the sale of around 200 million new shares in December, for which the company garnered around $844 million, as evidence of this.
“That single act of diluting shares saved the company and made the company a stronger company,” he said.
AMC sold 43 million more shares in May, netting $428 million in cash.
“In our view, yes we were aware that we were diluting share count, but in our view that $428 million in cash greatly strengthened AMC,” he said.
From January to May, AMC tallied around $1.6 billion in cash from these stock sales, Aron said. As of Wednesday, the company has around 501 million shares outstanding and about 46,000 shares left for future issuance.
“The shareholders should authorize more shares,” Aron said, “because this could be a very valuable tool to build this company going forward and grow this company going forward.”