(Bloomberg) -- AMC Entertainment Holdings Inc. rose in premarket trading, extending last week’s rally, after raising $230.5 million in new equity as it pledged to “go on offense” with acquisitions.
The movie theater operator, which has become a poster child for retail traders, jumped 17% to $30.60 as of 8:15 a.m. in New York after entering a purchase agreement with New York-based Mudrick Capital Management to sell 8.5 million shares of common stock at $27.12 apiece. The stock closed at $26.12 before the holiday weekend.
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AMC plans to use the cash proceeds from the sale for acquisitions of additional theater leases, as well as investments into AMC’s existing theaters, the company said in a statement. It is in discussions with multiple landlords of theaters formerly operated by Arclight Cinemas and Pacific Theatres, Chief Executive Officer Adam Aron said.
Mudrick Capital has made big bets on AMC in the past, helping the movie theater chain as it pushed through the pandemic. In January, the firm entered into an agreement to buy $100 million of new secured bonds in exchange for a commitment fee equal to about 8 million AMC shares. The deal also called for Mudrick to exchange $100 million of AMC bonds due 2026 for about 13.7 million shares.
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The latest deal with Mudrick may help the company reduce rent and other operating expenses if it’s able to enter into new lease agreements. AMC has been negotiating with its landlords to amend terms of certain leases and avoid a potential cash crunch through the height of the pandemic.
“With this agreement with Mudrick Capital, we have raised funds that will allow us to be aggressive in going after the most valuable theatre assets, as well as to make other strategic investments in our business and to pursue deleveraging opportunities,” Aron said in the statement.
This sale is the latest of several equity financings conducted by AMC during its meteoric rise this year. It follows the completion of an at-the-market offering in May and a bankruptcy-avoiding financing in January. Tuesday’s deal represents just 1.7% of AMC’s public float as of May 13, according to data compiled by Bloomberg.
(Updates share price move in the second paragraph and adds more details throughout.)
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