Volatility in “meme stocks” continued in premarket trading on Wednesday as AMC Entertainment Holdings announced a debt-for-equity exchange for $163.9 million in bonds maturing in 2026. This strategy mirrors management’s approach that helped the struggling movie theater chain capitalize on retail day traders to boost liquidity in 2021.
A regulatory filing released Wednesday morning detailed how AMC reached a deal to swap about $164 million of its 10% notes due 2026 for 23.3 million shares of newly issued stock. The new stock is valued at $7.33 per share.
“AMC, much of whose debt trades at distressed prices, has been chipping away at its maturities through other swaps and buybacks. It exchanged around $200 million of the debt for shares last year,” Bloomberg pointed out.
Today’s news sparked a rally in AMC’s high-yield bonds. The company has over $2.5 billion in outstanding bonds, most of which will mature in 2026.
News of the added supply sent shares down nearly 9% in premarket trading to the low $6 handle.
Shares were as high as $11.48 early Tuesday in the multi-day meme stock mania, triggered by a post on X from Roaring Kitty, also known as Keith Gill, on Sunday night.
Also, on Tuesday, AMC completed a previously disclosed ATM. The deal was completed through Citigroup Global Markets, Barclays Capital, B. Riley Securities, and Goldman Sachs & Co., raising about $250 million in new capital for the struggling company.
The old saying goes, “Strike while the iron is hot.” That’s precisely what AMC’s management is doing: taking advantage of retail day traders by completing ATM and debt-for-equity exchanges. Somehow, this company, which should’ve been dead a long time ago, continues to stay alive with help from Roaring Kitty, squeezing bearish hedge funds by igniting upside momentum through retail day traders.
We asked this question yesterday: Who’s Next For The ‘Roaring Kitty’ Treatment?
Tyler Durden
Wed, 05/15/2024 – 10:05
