AMC$AMC Entertainment(AMC)$ ’s Hycroft investment looks more like a distraction than anything else.
Talk about a bold diversification plan. Embattled movie theater chain AMC Entertainment Holdings (AMC) $AMC Entertainment(AMC)$ announced a 22% stake in Hycroft Mining Holding (HYMC) and its 71,000-acre gold and silver mine in northern Nevada. AMC will invest $27.9 million in HYMC in exchange for 23.4 million warrants units; each unit consists of 1 common share of Hycroft and 1 common share purchase warrant. The units are priced at $1.193 a share; each purchase warrant is priced at about $1.07 a share and carries a five-year term. AMC will also get a seat on Hycroft’s board. Eric Sprott, one of the world’s leading gold and silver investors, is making an equal investment in Hycroft along with AMC. Together, AMC and Sprott are investing $56 million.
This news looks more like a distraction than anything else. “To state the obvious, one would not normally think that a movie theatre company’s core competency includes gold or silver mining,” said AMC CEO Adam Aron. AMC’s other investments include adding new theaters and expanding the number of its IMAX and Dolby Cinema premium screens, and NFT programs. The chain’s boldest moves (before this one) were to accept cryptocurrency in theaters to boost attendance and to enter retail popcorn sales.
Meme money.
AMC is using money it raked in from the meme investing frenzy – about $1.8 billion– to fund the investment. “Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago. It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue,” Aron said.
Hycroft: meme fumes. Hycroft is a deSPAC which closed back in May-2020 from a SPAC sponsored by Mudrick Capital. After hitting a peak of ~$15 in August 2020, HYMC stock has sunk steadily downward, trading at ~$0.30 before today’s announcement. Mudrick moved on to Mudrick Capital Acquisition II (MUDS), which was set to merge with baseball card and collectible company Topps before that deal fell apart last summer. According to AMC, the Hycroft Mine has about 15 million ounces of gold deposits and some 600 million ounces of silver deposit. Notably, HYMC is doing its own at-the-market-offering to capitalize on the stock pop.
Source:boardroomalpha
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