AMC Collapses as Cineworld Bankruptcy Warning Causes Trouble Ahead of APE Debut

An AMC theater is pictured amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, US, Jan. 27, 2021. REUTERS/Carlo Allegri/File Photo

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Aug 22 (Reuters) – Shares of AMC Entertainment Holdings (AMC.N) fell nearly 40% in premarket trading on Monday after UK-based Cineworld’s (CINE.L) warning of possible bankruptcy scared investors away from its preferred stock from the American cinema chain list.

AMC’s preferred stock will trade Monday on the New York Stock Exchange under the ticker “APE.” The shares carry the same voting rights as common stock and are currently trading as separate securities, 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.

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“AMC has done a very fine balancing act between trying to have enough liquidity to meet its debts and not destroying the stock price until fundamentals appear lower.”

The decline in AMC shares was sparked after Cineworld, which owns Regal movie theaters in the United States, warned it was staring at a possible bankruptcy filing as it struggles to reduce debt that has skyrocketed during the pandemic. read more

Retail favorite AMC appeared to hit its lowest level in two months at market opening as losses continue, after repeating a “relatively weak” film slate in Q3 2022 on Friday.

“A broader change in how previous moviegoers want to watch the latest hit is a trend that is unlikely to be reversed or made easier for movie theater chains,” said Sophie Lund-Yates, analyst at Hargreaves Lansdown.

The COVID-19 lockdowns had a serious impact on the operations of cinema operators. However, AMC managed to raise $1.8 billion in 2021, capitalizing on the rally sparked by private investor interest in meme stocks, in stark contrast to the fate of Cineworld. read more

AMC shares are up more than 150% since the end of 2019, while Cineworld lost about 99% of its share value over the same period.

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Reporting by Medha Singh, Anisha Sircar and Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli

Our Standards: The Thomson Reuters Trust Principles.

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