AMC Entertainment’s APE Unit Surges 75% on Capital Raise and Reverse Stock Split News

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Movie theater chain enters into equity deal with debt holder Antara Capital, proposes conversion of APE units into common stock and reverse stock split

On Thursday, shares of APE (NYSE:APE), a unit of AMC Entertainment Holdings (NYSE:AMC), soared 75% after rising as much as 120% during the trading session after the parent company unveiled a dilutive capital raise and a proposed reverse stock split of its common shares.

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AMC plans to sell $110 million of its APE units to Antara Capital, one of its major current debt holders, at 66 cents per unit. Antara will also exchange $100 million of AMC notes on its balance sheet for 91 million APE units as part of the deal.

The COVID-19 pandemic led to a significant revenue drop that presented financial challenges for AMC, forcing it to find funding to stay afloat.

AMC intends to hold a special meeting to vote on the conversion of APE units into common stock and the 1:10 reverse stock split of AMC common shares. Antara has agreed to hold onto its APE units for up to 90 days but will vote in favor of the proposals at the special meeting.

In contrast, AMC's common shares fell by over 20% during Thursday's trade before recovering some and closing off by about seven percent due to dilution caused by the conversion of debt and APE units.

Article by Greg Morcroft, Fintel