UPDATE: Private equity firm Silver Lake, which has been one of the biggest stakeholders in AMC Entertainment in recent years, has sold its entire position in the top movie theater chain after a dramatic runup in its stock.
In an SEC filing after the close of trading, AMC said Silver Lake sold shares at between $14 and $24 per share, many times the price where it had traded as recently as three days ago. AMC stock, which has seen a massive influx of individual investment along with GameStop, has rocketed almost 300% for the week, ending today’s session at $13.19.
Silver Lake, whose media investments also include a significant stake in Endeavor, converted $600 million in AMC debt into equity and then sold the shares on the open market at a handsome profit. Another AMC backer, China’s Wanda Group, had lowered its stake in 2018, with Silver Lake assuming the $600 million in convertible notes.
Shares in top exhibitor AMC Entertainment roared back up 53% on heavy trading volume as a frenzy of bets by individual traders who band together online closed out a week of havoc on Wall Street.
The upswing left AMC stock at $13.19 heading into the weekend, nearly triple where it was a week ago. It erased Thursday’s declines of the theater chain and a roster of other beleaguered companies led by retailer GameStop, after several online brokers put curbs on trading.
As the financial system looked for remedies — and some investors filed class-action lawsuits against online firms like Robinhood for blocking trades — AMC was mulling its options. Multiple press reports said the company was considering another sale of shares to turn the stock momentum to its advantage. The company did not respond to Deadline’s request for comment.
Having managed to ward off bankruptcy during the 100-year catastrophe of Covid-19, the theater chain earlier got some much-needed relief due to the stock surge on Wednesday. The company converted $600 million in debt to equity, selling shares to one of its main backers, private equity firm Silver Lake Group.
The role of Reddit-based individual investors in the stock market has touched off a fierce debate about speculation and whether Wall Street should be the province of so-called “professionals,” as opposed to this new breed of traders. The potency of these loosely organized groups was seen as soon as several online trading platforms eased restrictions against certain stocks. Money poured back in as retail investors looked to continue squeezing hedge funds and others betting certain stocks would drop. GameStop shot up to $325 a share today, with trading volume at twice its normal levels. The stock began 2021 at $17.52.
The SEC has responded to the furor over the volatile market action by saying it will investigate, though a press release today was largely a collection of platitudes. “We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws,” the regulatory body said.
As a few stocks prospered, the Dow Jones Industrial Average, Nasdaq and S&P 500 all dropped more than 1% and almost all media and tech shares finished the day in the red. The unsettled moment for the markets comes amid much broader uncertainty as investors struggle to forecast how soon coronavirus vaccines will spur economic recovery and whether Federal Reserve policy will help or hinder it.
In yet another twist to the AMC saga, the company before the surge in its share price had announced a breakthrough new round of financing and a total of more than $900 million in new cash raised since December. Declaring that the “sun is shining for AMC,” CEO Adam Aron said Monday that the company would have enough liquidity to last into the second half of 2021 even if marquees remained dark.
Eric Wold, an analyst at B Riley who has an optimistic view of exhibition’s ability to rebound after the pandemic, told Deadline he suspects AMC will strongly consider cashing in again on the runup. Its shares, which have been stuck between $2 and $4 for most of the past year, rocketed 300% to almost $20 on Wednesday. “I suspect they’d want to have a little more cushion,” Wold said. “Why not take advantage of a price that’s many times what it was before?”