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AMC Entertainment (AMC) enters equity distribution agreement for AMC Preferred Equity Units

September 26, 2022 8:12 AM EDT

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AMC Entertainment (NYSE: AMC) disclosed:


We have entered into an equity distribution agreement (the “Distribution Agreement”) with Citigroup Global Markets Inc. as our sales agent (the “sales agent”), relating to the depositary shares (the “depositary shares” or “AMC Preferred Equity Units”), each representing a 1/100th fractional interest in a share of Series A Convertible Participating Preferred Stock (the “Preferred Stock”), offered by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the Distribution Agreement, we may, through our sales agent, offer and sell from time to time up to 425,000,000 AMC Preferred Equity Units. The sales agent may act as agent on our behalf or purchase AMC Preferred Equity Units as principal.
Each AMC Preferred Equity Unit is designed to provide the same economic and voting rights as one (1) share of our Class A common stock (the “Class A common stock”), as described in more detail herein. Subject to the terms described herein, the Preferred Stock and the AMC Preferred Equity Units (by virtue of their interest in the Preferred Stock) will convert into shares of our Class A common stock at the then-applicable conversion rate if we obtain stockholder approval to increase the number of authorized shares of our Class A common stock to a number at least sufficient to permit the full conversion of the then-outstanding shares of Preferred Stock into Class A common stock, or such higher amount as our board of directors may determine (the “common stock amendment”). The initial conversion rate is one hundred (100) shares of Class A common stock for each share of Preferred Stock or one (1) share of Class A common stock for each AMC Preferred Equity Unit. If the common stock amendment is adopted, each AMC Preferred Equity Unit will effectively convert into one (1) share of our Class A common stock and such Class A common stock will be distributed to holders of AMC Preferred Equity Units upon conversion on a one-to-one basis.
Sales, if any, of AMC Preferred Equity Units, under this prospectus supplement and the accompanying prospectus may be made in sales deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including by sales made directly on or through the New York Stock Exchange (“NYSE”) or another market for AMC Preferred Equity Units, sales made to or through a market maker other than on an exchange or otherwise, in negotiated transactions at market prices prevailing at the time of sale or at negotiated prices, through a combination of any such methods of sale, or as otherwise agreed with the applicable sales agents. The sales agent may also sell our Class A common stock by any other method permitted by law. We will submit orders to only one (1) sales agent relating to the sale of AMC Preferred Equity Units on any given day. Subject to the terms and conditions of the Distribution Agreement, the sales agent will use its commercially reasonable efforts, consistent with its normal trading and sales practices, to sell on our behalf the designated AMC Preferred Equity Units. We may instruct the sales agent not to sell any AMC Preferred Equity Units if the sales cannot be effected at or above the price designated by us in any such instruction.
We also may sell AMC Preferred Equity Units to the sales agent, as principal for its own account, including a block trade, at a price per AMC Preferred Equity Unit agreed upon at the time of sale. If we sell AMC Preferred Equity Units to the sales agent, as principal, we will enter into a separate terms agreement with the sales agent, and we will describe the agreement in a separate prospectus supplement or pricing supplement.
We will pay the sales agent compensation of 2.5% of the gross sales price per AMC Preferred Equity Unit sold through them as our agent under the Distribution Agreement up to $250,000,000 of gross sales proceeds and 1.5% of the gross sales price per AMC Preferred Equity Unit sold through them as our agent under the Distribution Agreement of an additional $250,000,000 of gross sales proceeds and thereafter at a rate mutually agreed by us and the sales agent. In connection with the sale of AMC Preferred Equity Units on our behalf, the sales agent will be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation paid to the sales agent will be deemed to be underwriting commissions or discounts.
The AMC Preferred Equity Units are listed on the NYSE under the symbol “APE”. Since the AMC Preferred Equity Units began trading on the NYSE on August 22, 2022, the market price of the AMC Preferred Equity Units has fluctuated from an intra-day low on the NYSE of $3.36 per share on September 23, 2022 to an intra-day high on the NYSE of $10.50 on August 22, 2022, and the last reported sale price of our AMC Preferred Equity Units on the NYSE on September 23, 2022, was $3.58 per unit.
Our Class A common stock is listed on the NYSE under the symbol “AMC”. The market prices and trading volume of our shares of Class A common stock has been and may continue to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control. Because each AMC Preferred Equity Unit initially represents the right to receive one (1) share of our Class A common stock upon effectiveness of the common stock amendment, and is otherwise designed to bear equivalent economic and voting rights as described herein, the market price of the AMC Preferred Equity Units may be correlated with the market price of our Class A common stock. The market prices and trading volume of our shares of Class A common stock have experienced, and may continue to experience, extreme volatility, which could cause purchasers of AMC Preferred Equity Units to incur substantial losses. During 2022 to date, the market price of our Class A common stock has fluctuated from an intra-day low on the NYSE of $7.66 per share on September 23, 2022 to an intra-day high on the NYSE of $34.33 on March 29, 2022, and the last reported sale price of our Class A common stock on the NYSE on September 23, 2022, was $7.99 per share.
During 2022 to date, according to the NYSE, daily trading volume for our Class A common stock ranged from approximately 16,708,581 to 226,704,834 shares. Daily trading volume for our AMC Preferred Equity Units ranged from approximately 5,921,774 to 122,699,834 AMC Preferred Equity Units. These extreme fluctuations in the market price of our Class A common stock and AMC Preferred Equity Units have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums. While the market prices of our Class A common stock and AMC Preferred Equity Units may respond to developments regarding our liquidity, operating performance and prospects, developments regarding COVID-19 and vaccination progress, and developments regarding our industry, we believe that volatility and our current market prices reflect market and trading dynamics unrelated to our underlying business, or macro or industry fundamentals, and we do not know how long these dynamics will last. Within the last seven business days, the market price of our Class A common stock has fluctuated from an intra-day low on the NYSE of $7.66 on September 23, 2022 to an intra-day high of $10.39 on September 15, 2022, and the market price of our AMC Preferred Equity Units has fluctuated from an intra-day low of $3.36 on September 23, 2022 to an intra-day high of $5.69 on September 15, 2022. We have made no disclosure regarding a change to our underlying business during that period. Under the circumstances, we caution you against investing in our AMC Preferred Equity Units, unless you are prepared to incur the risk of losing all or a substantial portion of your investment. See “Risk Factors — Risks Related to This Offering.”
Settlement of any sales of our AMC Preferred Equity Units will occur on the second business day following the date on which such sales were made (or such earlier day as is industry practice for regular-way trading). There is no arrangement for funds to be received in an escrow, trust or similar arrangement. Sales of our AMC Preferred Equity Units as contemplated in this prospectus supplement will be settled through the facilities of The Depository Trust Company (“DTC”) or by such other means as we and the sales agent may agree.
Investing in our AMC Preferred Equity Units is highly speculative and involves risks. You should carefully read and consider the risk factors included in this prospectus supplement, in our periodic reports, in the accompanying prospectus and in any other documents we file with the U.S. Securities Exchange Commissions (the “SEC”). See the sections entitled “Risk Factors” below on page S-9, in our other filings with the SEC and in the accompanying prospectus.
Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.




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