AMC falls after Cineworld's bankruptcy warning on day 'APE' starts trading (updated)

Marcus

22/08/2022 15:44

(Adds details on meme stocks, analyst comment, updates shares)
    By Anisha Sircar and Medha Singh
    Aug 22 (Reuters) - AMC Entertainment Holdings' shares
 AMC.N  tumbled nearly 30% on Monday after UK-based Cineworld's
 CINE.L  warning of a possible bankruptcy spooked investors on
the same day the American cinema chain's preferred stock listing
began trading.
    AMC's preferred stock, trading under the ticker "APE",
opened at $6.95 on the New York Stock Exchange on Monday. The
shares, intended as dividend, will have the same voting rights
as common stock and could be used for raising capital in the
future, the company said.
    Trading of both classes of shares was halted multiple times
in volatile trading.
    AMC and APE shares were together trading at $21.21, which is
higher than AMC's last closing price of $18.02, according to
Reuters calculation.
    "The issue is that the APE security (dividend) is a dilutive
security that should be viewed like a 2 for 1 split," said
Thomas Hayes, chairman of Green Hill Capital.
    AMC is "pretending to give existing shareholders something
of value, but in reality they are just paving the road for
future dilution."
    The decline in AMC shares was sparked after Cineworld, which
owns Regal cinemas in the United States, warned that it is
staring at a possible bankruptcy filing as it struggles to cut
debts that soared during the pandemic.  urn:newsml:reuters.com:*:nL4N2ZY1A4
    Retail favorite AMC reiterated on Friday a "relatively weak"
film slate in the third quarter of 2022. urn:newsml:reuters.com:*:nL4N2ZU39O
    The COVID-19 lockdowns severely impacted the business of
cinema operators. However, AMC managed to raise $1.8 billion in
2021, capitalizing on the rally triggered by retail investors'
interest in meme stocks, in a sharp contrast to Cineworld's
fate.  urn:newsml:reuters.com:*:nL4N2ZV2HZ
    AMC shares have jumped over 150% since the end of 2019,
whereas Cineworld lost about 99% of its share value in the same
period.
    Other retail favorites accelerated recent losses with Bed
Bath & Beyond Inc  BBBY.O  down 3% and Vinco Ventures  BBBY.O 
shedding 9%.

 (Reporting by Medha Singh, Anisha Sircar, Bansari Mayur Kamdar
and Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; Twitter: https://twitter.com/medhasinghs;))