Yesterday we discussed how AMC Entertainment missed out by raising funds through selling its stock — mostly before shares went parabolic.
Well! Not a day went by without management taking steps to rectify that state of affairs.
In a Form 8-K posted this morning, AMC announced that it had reached a private deal to swap nearly $164 million in debt due in 2026 into some of its now much more richly valued stock.
So, just to recap, the sequencing goes like this: A long-dormant Twitter/X account associated with Keith Gill, who made the bull case for GameStop, tweets a meme. Traders buy AMC because it enjoyed meme stock status along with GameStop in 2021. AMC’s management is then able to use this rally to pay off $164 million in debt while (in theory) watering down the value of its stock by issuing more of it.
As of the end of Q1, AMC had nearly $9 billion in debt and had cumulative losses of about $5.7 billion since the onset of the pandemic. In the best quarter the company has enjoyed over this period — one of only two quarters in which it made money — the firm posted an operating profit of $99.4 million.
AMC is in the business of receiving money in exchange for providing access to a very entertaining show. I’m talking, of course, about its financing activities and the stock market — not going to the movies.
