What does the Special Dividend mean for AMC holders? via /r/wallstreetbets #stocks #wallstreetbets #investing


What does the Special Dividend mean for AMC holders?

Full disclosure, normally I'm here just to insult people and laugh at you. In the past I may have sold you AMC calls which has paid for my new laptop and some very expensive vodka.

However to clear my conscience, I will have one go at explaining what the AMC Management ('Management') is about to do to common stock holders. As a reference I am exclusively using the SEC filings that AMC ('Company') has made in connection with the special dividend on August 4th.

You can find it here: Financial Performance – SEC Filings | AMC Theatres

Specifically there are two relevant documents

  1. FORM 8-A FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
  2. Form S-3 REGISTRATION STATEMENT

I'm also referring to the press statement the CEO has made which can be found anywhere in the web

I will use rounded numbers as to not overburden anyone's brain too much. I'll try to use short sentences and easy words. However, Management has made this transaction complicated.

Background:

  1. As of August 6th AMC has ca. 500m class A common shares ('Common Share') outstanding which trade under $AMC
  2. An vote to increase of the authorized amount of Commons initiated by Management has failed in 2021
  3. On Aug 4th 2022 the Company has filed forms 8-A and S-3 to register and issue 50m units of Preferred Stock ('P-Shares')
  4. On August 4th 2022 the Company has applied to list under the symbol $APE what they call AMC Preferred Equity Units ('P-Units')
  5. On August 4th 2022 the company has declared a special dividend of one P-Unit for each Common Share which will be fully completed on August 22 2022

Description of P-Shares and P-Units:

Comparison of the 3 share instruments issued by the Company

The table above shows the key qualities of the 3 share instruments. It is key to note that with the issuance of the P-Shares, the Common Shares and the P-Units only represent ca. 18.2% of the total voting rights.

What does this mean?

  • As of August 22nd, current holders of Common Shares will not be in control of the company anymore
    • Common Shares will represent ca. 9% voting rights
    • P-Unit ($APE) will holders represent ca. 9% of voting rights

  • As of August 22nd current holders of Common Shares will have a vastly reduced dividend entitlement
    • Common Shares will be entitled to ca. 9% of the total dividend
    • P-Units ($AMC) will be entitled to ca. 9% of the total dividend

  • The Management is free to issue the remaining P-Shares to any party they may choose

Further Provisions of the filings

  • The Management (without Shareholder consent) has the right to issue further P-Shares

I will not interpret the facts above, I think any half intelligent person will be able to put 1 and 1 together and figure out what this means. I want to close with a screenshot of the filings

Page 5 of the S-3 form submitted by AMC to the SEC

Submitted August 06, 2022 at 08:09AM by This_Professor8379
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