AMC is exchanging stock for bonds that mature in 2026
AMC Chairman and CEO Adam Aron at a panel event.
AMC Entertainment Holdings Inc.’s stock fell 8% early Wednesday, after the cinema operator disclosed that it will issue 23.3 million shares in a debt-for-equity exchange for $163.9 million of bonds that mature in 2026.
The 10%/12% cash/PIK toggle bonds — PIK stands for payment-in-kind — offer an issuer the ability to defer interest payments in return for a higher coupon later.
Based on the aggregate principal amount of the bonds plus $6.9 million of accrued interest, the stock is being issued at an implied value of $7.33 a share, the company said in a regulatory filing.
The stock closed Tuesday at $6.85 after rising 32% on the day to bring its week-to-date gains to 135.4%.
The stock took off on Monday along with other meme stocks, after trader Keith Gill, aka Roaring Kitty, posted his first tweet since 2021 and revived the trading frenzy from that period.
The news comes a day after AMC disclosed that it had completed an at-the-market offering of $250 million of equity capital on Monday via the sale of 72.5 million shares at an average price of $3.45 per share.
That ATM offering had originally been announced on March 28.
The news spurred a rally in AMC’s high-yield bonds. The company has more than $2.5 billion in outstanding bonds, most of which will mature in 2026. The company has been reducing its debt via debt-for-equity exchanges or cash transactions on the open market or in private deals.
GameStop Corp., meanwhile, was up 3.9% early Wednesday. GameStop and AMC were the original meme stocks and GameStop has gained 179% in the week to date, without any fresh news driving the move.