AMC takes advantage of the high to sell shares, but misses an even bigger payment

(Reuters) – AMC Entertainment Holdings Inc said on Wednesday that it raised $ 304.8 million from the sale of shares during an unprecedented rally driven by social media in its shares, although the United States film company might have raised about four times as much waiting for another day.

AMC was forced to raise capital to stay afloat after its ticket sales plunged 80% in the wake of the coronavirus outbreak. It avoided bankruptcy last year thanks to a debt restructuring agreement with its creditors and private equity firm Silver Lake.

Shares in Leawood, Kansas-based AMC rose 41% cumulatively on Monday and Tuesday, as amateur investors, many of them organized online in forums like Reddit’s WallStreetBest, decided to contract hedge funds by selling shares.

AMC disclosed on Wednesday that it sold $ 304.8 million in shares on Monday and Tuesday, at an average price of $ 4.81 per share.

The company’s stock, however, jumped up to 310% on Wednesday as the speculative frenzy intensified. They closed at $ 19.90 a share, about 301% more on the day. If AMC had sold the same number of shares at that price, it would have raised $ 1.26 billion.

While AMC may decide to sell more shares in the coming days, the money it left on the table shows how the speculative high of the past few days in heavily shorted stocks, especially those of video retailer GameStop Corp, presents an opportunity and a challenge for companies .

An AMC spokesman did not respond to a request for comment.

AMC, which also operates British Odeon cinemas, said on Monday that it had already raised enough money to rule out potential bankruptcy. Through a combination of debt and equity issues, it has raised $ 917 million since mid-December to help cushion the pandemic blow.