Shares crash with the announcement of the company’s new favorite APE

hot on the heels of announcing it Q2 2022 Results Tomorrow, movie theater chain and meme stock AMC announced It will issue a new type of preferred stock as a dividend to existing AMC shareholders. The announcement of the new preferred stock, ticker symbol APE, has sent AMC shares down in pre-market trading this morning. Here’s what you need to know.

  • What’s up with AMC and APE? Briefly, AMC announced that it is creating a new preferred stock called APE, which stands for “AMC Preferred Equity Units.” APE’s shares will be issued as a dividend to existing AMC shareholders, and will begin publicly traded shortly thereafter.
  • Is It Odd to Issue Preferred Stock as a Dividend? It’s not very common. Dividends are usually issued in cash.
  • So how is APE different from AMC stock? It will have its own separate stock trading on the stock market, so its price may be different from the AMC stock price. However, for investors, one share of APE will provide the same voting rights as one share of AMC.
  • How many APE shares will be given to AMC shareholders? As there are currently 516,820,595 AMC shares, 516,820,595 APE shares will be awarded.
  • Why did AMC create APE preferred shares? This is where it gets interesting. AMC wanted to create fresh shares of AMC stock last year to raise more money, but investors turned the deal down, fearing that their existing AMC shares would weaken. Without the approval of the investor, the AMC cannot issue more AMC shares. , , But they may issue a new type of stock. Thanks to authorization from AMC shareholders in 2013, AMCs became known as AMC Preferred Equity Units – and thus nine years later APE was born. When the APE becomes public, the funds raised will go to the AMC. Thus AMCs can now raise funds through APE even though they cannot create new AMC shares. However, 516 million APE shares will be issued free of cost to AMC shareholders, as wall street journal reportsAMC may create another 4.5 billion APE shares to sell to the public.
  • But why is AMC paying APE to existing shareholders? Call it encouragement. If you own the new stock, you are less likely to rebel against it (or object to its issuance) when it is in your best interest that the share price of the new stock rises.
  • So who gets the free APE shares? Whoever owns AMC stock by the close of business on Monday, August 15, 2022, will receive APE shares. AMC stock owners will receive one share of APE for each share of AMC they own. APE shares will be paid for by the end of the trading day on Friday, August 19, 2022. However, if the owner of AMC stock sells their AMC shares before the APE goes public, they will not be entitled to their free APE shares.
  • When does APE go public? APE will begin trading publicly on the New York Stock Exchange (NYSE) on Monday, August 22, 2022
  • What does AMC say about all this? Adam Aaron, chairman and CEO of AMC Entertainment, said, “We believe the dividend of AMC Preferred Equity Units is probably the single biggest action we can take for our shareholders in 2022 to fundamentally strengthen AMC over the long term. The new AMC Preferred Equity gives AMCs a currency that can be used to strengthen our balance sheet in the future, including by paying off debt or raising new equity. As a result, this will dramatically reduce the risk of any near-term gains for AMCs. Minimizes the survival risk of the period, as we continue to work our way through this pandemic. It can also provide AMCs with additional capital allowing us to seek investment opportunities that generate significant shareholder value. Can create and be transformative in nature. All this is not good news for those who may be against AMC.”
  • How is the reaction of AMC shareholders? Well if today’s pre-market AMC stock price is anything to go by. At the time of this writing, shares of AMC are down about 10%. We will have to wait to see if the public goes to the apes for the APE on 22nd August.

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