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What Are AMC APE Units? Preferred Class of Stock, Explained

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  1. AMC Entertainment (AMC) has fully embraced its meme popularity with the release of a special dividend called “APE” units.
  2. Order flow rebates are not available for non-options transactions.
  3. Investors should consider their investment objectives and risks carefully before investing in options.
  4. All investments involve the risk of loss and the past performance of a security or a financial product does not guarantee future results or returns.
  5. The sale of APE units to Antara will be split into two tranches.
  6. The reality is that very few people interested in either AMC shares or APE units are concerned about a potential bankruptcy  and are more likely just looking to make short-term trades on current sentiment.

For AMC Entertainment (AMC), the release of its new preferred stock class called APE units has come at a bad time. Competitor Regal Cinemas announced a potential bankruptcy, which caused hysteria in the movie theater industry. Theoretically, the shares should converge and trade at roughly the same price as APE units are convertible into AMC stock on a one-to-one basis. Additionally, APE units are preferred equity meaning they would be paid out first in a potential AMC bankruptcy. If anything APE units should be sold at a premium over AMC shares which is not the case currently as APE hovers around $6.60 and AMC trades around $9.35.

What Is AMC’s 1-for-10 Reverse Stock Split?

The exact rebate will depend on the specifics of each transaction and will be previewed for you prior to submitting each trade. This rebate will be deducted from your cost to place the trade and will be reflected on your trade confirmation. Order flow rebates are not available for non-options transactions. To learn more, see our Fee Schedule, Order Flow Rebate FAQ, and Order Flow Rebate Program Terms & Conditions. AMC Entertainment appears to have found a creative solution to increase its share count and raise funds after investors abandoned proposals to issue more shares last year. With the lawsuit settled, AMC implemented the APE conversion on August 25, 2023.

Consistent with AMC’s reverse split, each share of APE was converted into 0.1 shares of AMC. That included $110 million from AMC’s creditor Antara Capital, LP. Antara also accepted 91 million APE units as payment for $100 million of AMC’s outstanding debt.

AMC investors will go APE, company announces

AMC Entertainment (AMC) has dominated financial headlines for weeks and the good folks of Reddit aren’t to blame. The movie theater company is working through a complex plan to improve its balance sheet and reduce its interest expense burden. The stock surge at the time helped the company strengthen its financial position, as executives seized the opportunity to sell shares and repurchase debt. But with stock in AMC having come back down to earth in value, the exhibition giant has been hard-pressed to keep raising fresh cash to run its business. The special shareholders meeting aimed to help the mega exhibitor continue selling stock to reduce its high debt load.

The APE conversion vote will have the effect of eliminating a gap between the value of AMC common shares and its APE preferred dividend, which has hampered efforts to sell stock. Investment Plans (“Plans”) shown in our marketplace are for informational purposes only and are meant as helpful starting points as you discover, research and create a Plan that meets your specific investing needs. Plans are self-directed purchases of individually-selected assets, which may include stocks, ETFs and cryptocurrency.

APE units rose 9 percent to $1.88 in trading on Tuesday, while AMC stock fell by 72 cents, or around 13 percent, to $4.74, as investors begin to anticipate a possible convergence. The sale of APE units to Antara will be split into two tranches. The first tranche involves the immediate purchase by Antara of 60 million APE units under the Company’s at-the-market program (“ATM program”). Prior to that transaction, AMC had not split its stock, either positively or negatively, since it listed on the NYSE in 2013. They characterize AMC as a value trap, arguing that there’s no fundamental improvement in the business. The company has struggled to generate profits for years, even before the pandemic shuttered movie theaters.

The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity. T-bills are subject to price change and availability – yield is subject to change. Investments in T-bills involve a variety of risks, including credit risk, interest rate risk, and liquidity risk. As a general rule, the price of a T-bills moves inversely to changes in interest rates. Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment.

While the reverse split blurs the outcomes, higher share counts reduce EPS and lower the ownership percentage represented by each share. AMC announced plans to reverse split its stock and convert the APE shares in December 2022. The company, needing shareholder approval for both initiatives, scheduled the shareholder vote for March 2023. Typically, preferred equity has seniority over common equity with respect to dividends and in bankruptcy payouts.

What Is AMC’s Stock Forecast?

However, retail investors still remain at risk during the process. Cineworld, the parent company of Regal Cinemas and the second-largest movie theater circuit in the world, says admission levels are poised to remain low through November of this year. This will put its liquidity in a tough spot and could spark a bankruptcy filing. “I would like to commend our shareholders for the ultimate swing trading strategies guide wisdom exhibited in your votes by approving these proposals, and doing so by a wide margin. This is a landslide victory that shows your determination to keep AMC a strong and innovative company and the leader of our industry,” CEO Adam Aron said following the affirmative votes. Going forward the APE units are not linked to AMC shares and can thus be bought and sold separately.

Securities products offered by Public Investing are not FDIC insured. Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. AMC announced on Aug 4, 2022, that it will pay dividends to all common stockholders in preferred stock.

In a stock split, the share count rises and the share price falls. A 2-for-1 split, for example, doubles the share count and halves the share price. These effects cancel each other out, which is why the value of shareholders’ positions and the company’s market cap don’t change.

Apex Clearing and Public Investing receive administrative fees for operating this program, which reduce the amount of interest paid on swept cash. Neither Public Investing nor any of its affiliates is a bank. The above content provided and paid for by Public and is for general informational purposes only.

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