AMC slumps as Cineworld's bankruptcy warning spells trouble ahead of APE debut

Marcus

22/08/2022 13:56

Aug 22 (Reuters) - AMC Entertainment Holdings' shares
 AMC.N  tumbled nearly 40% in premarket trading on Monday after
UK-based Cineworld's  CINE.L  warning of a possible bankruptcy
spooked investors ahead of the American cinema chain's preferred
stock listing.
    AMC's preferred stock will begin trading on the New York
Stock Exchange on Monday under the ticker "APE". The shares will
have the same voting rights as common stock and trade as a
separate security for now, the company said. 
    "The AMC distribution of "APE" is somewhere between a stock
split and a stock dividend," said Rick Meckler, partner at
Cherry Lane Investments.
    "AMC has been on a very fine balancing act between trying to
have enough liquidity to meet its debt and not destroying the
stock price until its fundamentals would seem to be lower." 
    The decline in AMC shares was sparked after Cineworld, which
owns Regal cinemas in the United States, warned that it was
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 looked set to hit two-month lows at
market open if losses hold, after reiterating on Friday a
"relatively weak" film slate in the third quarter of
2022. urn:newsml:reuters.com:*:nL4N2ZU39O
    "A broader change in how previous cinema-goers want to watch
the latest hit is a trend unlikely to reverse or get any easier
for cinema chains," said Sophie Lund-Yates, analyst at
Hargreaves Lansdown
    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.

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