AMC shares slide as CEO says it will seek shareholder approval for 500 million share offering

Shares of AMC Entertainment fell as much as 5% Thursday after the company’s CEO told CNBC it has asked for shareholder approval to issue 500 million shares.

AMC has navigated its way through the coronavirus pandemic through fundraising efforts that have staved off bankruptcy and allowed the movie theater chain to continue to operate, albeit at limited capacity.

In January, the company disclosed that it had secured enough financing to remain open and operational deep into 2021. Still, AMC could look to raise even more cash and capitalize on its stock’s recent Reddit-fueled rally, which fueled its market value.

Shares of the company are up more than 375% since January and its market cap currently hovers at just under $4.6 billion. In January, AMC’s stock hit a 52- week low of $1.91 on Jan. 5, but then soared to $20.36, setting a 52-week high on Jan. 27.

“Dilution is something we care about, but I will say we are formally asking approval from our shareholders to authorize another 500 million new shares that the company could issue if it wishes,” CEO Adam Aron said on CNBC’s “Squawk on the Street.” “There are a lot of benefits to our shareholders of having more authorized shares out on the market.”

“We’ll be sensitive to dilution issues, but at the same time there’s an opportunity to bolster our cash reserves and there’s an opportunity to buy back debt at a discount or pay deferred theater rents,” he added. “There are a lot of good reasons for shareholders to give us the authority.”

Aron noted that the increase of vaccinations and new movie releases is already having a positive impact for AMC. He said Wednesday’s attendance for the opening of “Godzilla vs. Kong” in North America was 10 times what it has been for every other Wednesday so far in 2021.

Warner Bros. said Thursday that “Godzilla vs. Kong” secured $9.6 million in ticket sales during its opening night, a record opening for the pandemic.