The pandemic-hit cinema chain AMC Entertainment has used its status as a “meme stock” to launch several opportunistic equity fundraisings this year and pull itself back from the brink of bankruptcy, but it appeared on Tuesday to have hit the limit of what its existing shareholders will tolerate.
The company said it was scrapping plans to create as many as 25m new shares, which could have been sold to raise more than $1bn based on Friday’s closing price, after feedback from investors.
The plan was due to go to a shareholder vote later this month.
“It’s no secret I think shareholders should authorise 25 million more AMC shares,” the company’s chief executive, Adam Aron, wrote in a tweet. “But what YOU think is important to us. Many yes, many no. AMC does not want to proceed with such a split.”
AMC shares have surged this year as retail investors have snapped up the stock, making it one of the most talked-about investments after retailer GameStop. AMC has taken advantage of the fervour by raising $1.25bn through share sales between April and June.
The moves, however, have pushed the number of shares AMC is authorised to issue towards a limit established in its incorporation documents. The company made a previous attempt to raise that limit earlier this year, but that was also withdrawn when it became apparent it would not win shareholder backing.
On Tuesday, Aron said the company would not make a third attempt until 2022 at the earliest. The stock was up 3 per cent in pre-market trading to $53.60 after abandoning the attempt to raise its share count authorisation.
AMC entered the pandemic with more than $4.5bn in debt and more than $450m in deferred lease payments, according to analysts, but its ability to raise new finance means it has come through a health crisis that shut most of its cinemas for many months.
The stock is up more than 2,300 per cent since the end of 2020 and the company now has more than 3m retail shareholders, making up 80 per cent of the shareholder base, compared with 10 per cent at the start of the year, according to analysts.
Aron has carefully courted retail investor favour, including offering shareholders free popcorn last month and appealing to meme culture by giving interviews over Zoom with no trousers on.