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AMC shares gain after movie theater chain raises $325.5 million from stock sale

News Team

Shares in AMC Entertainment Holdings (NYSE: AMC) jumped in premarket trading on Thursday after the cinema chain announced that it garnered about $325.5 million in new equity capital through the sale of 40 million shares.

AMC has been attempting to both rebound from a pandemic-driven era of location closures and face intense competition from streaming services for audiences. However, the money-losing firm has enjoyed a strong improvement in box office performance this summer thanks to the soaring popularity of new titles “Barbie” and “Oppenheimer,” while demand is expected to receive a further boost from the debut of mega-popular entertainer Taylor Swift’s concert film in October.

Although the dilutive impact of the fundraising was relatively unpopular with investors, Kansas-based AMC said the move will help it “survive and then thrive” in a post-crisis operating environment by placing it on a “successful recovery glidepath.”

AMC added that the equity sale, in which it offered shares at an average price of $8.14 apiece, “significantly boosts” the company’s cash reserves, fortifies its balance sheet, and addresses “current liquidity problems.”

The fresh capital will also help AMC overcome recent headwinds to the film industry, including ongoing strikes by writers and actors, the group noted.

“This infusion of capital provides us with flexibility to assist us in navigating the waters ahead and continue delivering the magic of movies to our guests,” Chief Executive Officer Adam Aron said in a statement.

Source: https://ng.investing.com/news/stock-market-news/amc-shares-gain-after-movie-theater-chain-raises-3255-million-from-stock-sale-1059007