Dalian Wanda, who acquired AMC Entertainment in 2012, handed over control of the struggling exhibitor while issuing and selling parts of new stock to raise cash – which diluted the interest of the Chinese conglomerate.
CEO Adam Aron has confirmed that the Wanda era is over, although the company is still the largest single shareholder of AMC. Wanda owns less than 10% of the world’s largest cinema chain. “They were absolutely delightful,” he said during a conference call on Wednesday. “Now AMC will be managed like most other listed companies with a wide range of shareholders.”
More of the deadline
Aron touched on the shares ‘Reddit protest, the Silver Lake exit, the lessors’ negotiations and AMC’s cash position.
Most of AMC’s revenue disappeared last year, losing nearly $ 1 billion in the fourth quarter and $ 4.6 billion for the entire 2019 quarter.
Wanda acquired AMC’s Class B shares by super vote with three votes per share, making it the controlling interest, as long as its economic interest remains above 30%. But Wanda converted the B shares to regular Class A, with one vote each. New shares issued by AMC to raise funds during the pandemic diluted Wanda’s stake to well below the 30% threshold.
Wanda has two directors on AMC’s board, Lin Zhang and Zeng Maojun.
The large investment firm Silver Lake Partners, which provided AMC with a cash injection in 2018 by acquiring $ 600 million AMC convertible bonds, has paid out. With the Reddit-fueled AMC shares in January, Silver Lake converted its debt into equity and acquired 44 million shares at $ 14 each, then sold them for $ 713 million.
It removed $ 600 million in interest-bearing debt from AMC’s books. Aron said the “relationship was very important to us” and he hopes Silver Lake’s representative on the AMC board, managing director Lee Wittlinger, “will serve for a long time to come.”
On Reddit, Aron just said, ‘I really took one thing to heart. How the 101-year-old AMC is an important part of the American zeitgeist. ‘
Retailers in the Reddit chat room Wall Street Bets started financial markets late last year by suddenly plunging into a handful of down-and-out stocks led by GameStop and AMC. Shares of the exhibit, which at one point were less than two dollars last year, soared to more than $ 20. The impact lingered. The stock closed at about $ 10 on Thursday.
Aron noted that 99% of the cash AMC raised came in before Reddit.
The company has $ 1 billion in cash in its books – enough to see it through to 2021 if there is even a semblance of recovery. It has taken a breather since raising capital since January, but remains focused on strengthening its liquidity position and paying off debt.
He thanked landlords for postponing rent last year. Sean Sullivan, chief financial officer, said a piece of deferred rent was payable in the first quarter, but additional concessions are still being discussed. He said that AMC closed 60 theaters last year – 48 in the US and 12 abroad.
Aron said landlords want to do business with AMC. The chain will continue to build and lease theaters, but in new transactions, landlords will pose more risks than in the past.