AMC Entertainment has withdrawn a request for an additional 25 million shares that was due to be voted on at a meeting of shareholders on July 29.
On Tuesday, in an SEC filing, the parent company of AMC Theaters said it was abandoning its proposed 25 million share offering that was due to be voted on by proxy. “After careful consideration and consideration with further discussions with management and its advisers, the company has decided to withdraw Proposal 1 from shareholders’ consideration for the next annual meeting,” AMC Entertainment told investors.
The proposed amendment would have continued AMC’s strategy of taking advantage of the rise in its share price to raise more cash for possible acquisitions. The movie chain has seen its share price rise and fall significantly due to occasional traders being encouraged by online group WallStreetBets on Reddit to buy and even AMC stock.
AMC Entertainment CEO Adam Aron on his own Twitter account said voting on four other matters requiring approval at AMC’s annual meeting of shareholders on July 29 will remain on the schedule. “But proposal 1 is officially tabled. There will be no vote before 2022 on more shares ”, added Aron.
The withdrawal of the proposed increase of 25 million shares is seen as a sign that AMC’s “Ape” retail base has succeeded in fending off company management. Aron walked a fine line between continuing to raise new money via equity increases to grow after the pandemic, including with one-off deals, while being aware that many retail investors who make up around 80% of the shareholders of his company do not want to see a dilution of the shares.
“It’s no secret that I think shareholders should authorize an additional 25 million AMC shares. But what YOU think is important to us. Many yes, many no. AMC does not wish to proceed with such a split. So we are canceling the July vote on more shares. And no more such requests in 2021, ”added Aron on his Twitter account.
AMC Entertainment has been the target of hedge funds that borrowed stocks and then sold them, expecting the price per share to drop before buying back the shares at a lower price, returning them to the lender and pocketing them. the difference. But during a massive crisis, rebellious online traders bought shares in AMC Entertainment and drastically increased prices.
And it forced the hedge funds to buy back AMC shares at a higher price than expected and lose money in the process. Shares of AMC Entertainment rose $ 1.79, or 3.5 percent, to $ 53.75 in pre-market trading.