AMC Entertainment has withdrawn a request for an extra 25 million shares that was to be voted on at a July 29 shareholder meeting.
On Tuesday in an SEC filing, the parent of AMC Theatres said it was scrapping its proposed 25 million share offering that was to be the subject of a proxy vote. “Upon review and careful consideration with further discussions with management and its advisors, the company has determined to withdraw proposal 1 from stockholder consideration for the upcoming annual meeting,” AMC Entertainment told investors.
The proposed amendment would have continued AMC’s strategy to take advantage of its rising share price to raise more fresh cash for possible acquisitions. The cinema chain has seen its share price dramatically rise and fall due to casual retail traders encouraged by the online WallStreetBets group on Reddit to buy up and meme AMC’s stock.
AMC Entertainment CEO Adam Aron on his own Twitter account said voting on another four issues requiring approval at the July 29 annual AMC shareholder meeting will remain on the schedule. “But proposal 1 is hereby officially tabled. There will be no voting before 2022 on more shares,” Aron added.
Withdrawing the proposed 25 million share increase is being seen as a sign that AMC’s retail base has successfully pushed back on company management. Aron has walked a fine line between continuing to raise fresh cash via stock raises to grow post-pandemic, including with one-off deals, while mindful that many retail investors that comprise around 80 percent of shareholders in his company don’t want to see a share dilution.
“It’s no secret I think shareholders should authorize 25 million more AMC shares. But what YOU think is important to us. Many yes, many no. AMC does not want to proceed with such a split. So, we’re cancelling the July vote on more shares. And no more such requests in 2021,” Aron added on his Twitter account.
AMC Entertainment has been the target of hedge funds that borrowed shares of stock and then sold them, having expected the price per share to fall before they buy back the shares at a cheaper price, return them to the lender and pocket the difference. But in a massive short squeeze, rebel online retail traders have bought up stock in AMC Entertainment and dramatically drove up the prices.
And that has forced hedge funds to buy back stock in AMC at a higher-than-expected price and lose money in the process. Shares in AMC Entertainment were up $1.79, or 3.5 percent, to $53.75 in pre-market trading.
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July 06, 2021 at 08:02PM
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