The new preferred share is akin to having another stock and AMC will be able to do deals, and potentially pay down debt. “Today we are rewarding and recognizing our passionate and supportive shareholders, both to our shareholders in the U.S. and internationally,” CEO Adam Aron said in a statement. “Shareholders will receive one AMC Preferred Equity unit for each company issued share of AMC common stock that they own.” The new APE units trade under the ticker “APE,” while the AMC common shares will continue to trade under “AMC.” The initial APE units were distributed free of charge, but the company’s filings say it has the right to sell more of the units in the future — without additional shareholder approval.
In the traditional sense, this means that dividends would be paid to preferred shareholders before that of common shareholders. Or in the case of a bankruptcy, preferred shareholders would be paid out before that of common shareholders. However, the APE units are a corporate finance tool at their core because the shares create a new way for AMC to raise money. When its stock price soared in 2021, the beleaguered theater chain sold millions of common shares to keep itself afloat during the pandemic, but eventually it ran out of its allotment. The reality is that very few people interested in either AMC shares or APE units are concerned about a potential bankruptcy and are more likely just looking to make short-term trades on current sentiment.
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This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy. The movie theater company used APEs to raise cash and pay off or restructure debt. With those objectives played out, AMC decided to simplify its capital structure by converting APEs into AMC shares.
Given AMC’s uncertain future, that discrepancy could cause the share prices of the APE units and the AMC stock to diverge. The special dividend seems to be in keeping with CEO Adam Aron’s aggressive marketing efforts to appeal to the retail investors who call themselves “Apes” and have rallied around AMC over the past year and a half. Investment Plans (“Plans”) shown in our marketplace are for informational purposes only and are meant as helpful starting points as you discover, research and create a Plan that meets your specific investing needs. Plans are self-directed purchases of individually-selected assets, which may include stocks, ETFs and cryptocurrency. Plans are not recommendations of a Plan overall or its individual holdings or default allocations. Plans are created using defined, objective criteria based on generally accepted investment theory; they are not based on your needs or risk profile.
This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. Order flow rebates are not available for non-options transactions. To learn more, see our Fee Schedule, Order Flow Rebate FAQ, and Order Flow Rebate Program Terms & Conditions. If you want to invest in AMC, consider keeping your position conservative-at least until there’s more clarity on the long-term effect of the Hollywood strike and AMC’s growth strategy.
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On September 6, AMC announced its intention to sell 40 million more common shares. The company will again use the proceeds to repay debt and improve its cash position. These preferred equity units are a workaround, of sorts, and free AMC up to sell additional units of stock as it continues to revive its business after the pandemic. After offering the 517 million APE units, AMC will still have around 4.5 billion units remaining that it could sell to raise funds. If AMC were to sell additional preferred shares, existing shareholders would see their claim on the assets and potential profits of the struggling theater chain watered-down even further.
Because the APE units are preferred equity, there are different rights in a potential bankruptcy proceeding than the regular common stock. In some ways, the unusual move resembles a stock split, where investors get additional stock proportional to every one share they previously owned. Each APE unit may be converted in the future to one common share of AMC, making this move like a 2-for-1 split. Theoretically, the shares should converge and trade at roughly the same price as APE units are convertible into AMC stock on a one-to-one basis.
- They had the same voting and economic rights as AMC common shares.
- Some investors received APE units in the form of a dividend payout prior to the preferred class actually beginning to trade.
- You are responsible for establishing and maintaining allocations among assets within your Plan.
Just look at all the retail investors deriding Jim Chanos, whom attempted to educate them on what this preferred equity unit really means. “With the creation of APEs, AMC is deeply and fundamentally strengthening our company,” Aron said in a separate shareholder letter issued Thursday. “Given the flexibility that APEs will give us, we likely will be able to raise money if we need or so choose, which immensely lessens any survival risk as we continue to work our way through this pandemic to recovery and transformation.” AMC Entertainment appears to have found a creative solution to boost its share count and raise funds after investors balked at a proposal to issue more shares last year. Such information is time sensitive and subject to change based on market conditions and other factors.
AMC issued APE stock FAQ:
The creation of APEs laid the groundwork for AMC to access capital funding, without technically diluting its common shares. The company’s prior attempts to issue new common shares had not been well-received by investors. AMC issued a special preferred shares dividend to shareholders called APE and this article will explain everything you need to know. AMC raised billions during the pandemic by selling new stock but ran out of shares to sell. Investors, fearing dilution, rejected the company’s efforts to issue additional stock.
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The document also said that some brokerages may take “several days” to transfer the APE units into individual accounts. AMC also reported its second-quarter results after market close, reporting a narrowing loss and revenue in line with analysts’ expectations. The movie-theater chain reported a net loss of $121.6 million, or a net loss of 24 cents a share, compared with a net loss of 344 million, or a net loss of 71 cents a share, in the same period last year.
Going forward the APE units are not linked to AMC shares and can thus be bought and sold separately. Investors can choose to invest in AMC and/or APE shares and the two have already exhibited different trading patterns. broker exness review Prior to that transaction, AMC had not split its stock, either positively or negatively, since it listed on the NYSE in 2013. With the lawsuit settled, AMC implemented the APE conversion on August 25, 2023.
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AMC will be issuing an APE dividend for each of its almost 517 million shares outstanding, according to Chief Executive Adam Aron. Ultimately, market trading determines the ongoing prices of AMC shares and APE units. They are very similar in nature, so logic says that initially the AMC share should approximately trade for 50% and the APE unit 50% of where shares trade just before the dividend. AMC CEO Adam Aaron tweeted that the APE dividend was issued mainly to reward loyal shareholders with an NFT-like gift and expose naked short sellers who bet against the stock. This aspect of the dividend, by all accounts, is where the confusion and conspiracy theories come in.
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