Last month, it was announced that AMC Entertainment (NYSE:AMC) would raise $110 million in new equity capital. Antara Capital, an investment firm based in New York, agreed to assist with this by buying AMC Preferred Equity Units (NYSE:APE). Antara had previously been a shareholder of AMC debt. The investment firm also agreed to exchange $100 million in debt for about 91 million APE stock.
At the time, CEO Adam Aron said:
“Given the consistent trading discount that we are routinely seeing in the price of APE units compared to AMC common shares, we believe it is in the best interests of our shareholders for us to simplify our capital structure.”
Yesterday, the Securities and Exchange Commission (SEC) received the Schedule 13D filing detailing Antara’s acquisition. Let’s get into the details.
APE Stock: Antara Capital Acquires 60 Million Units
As of Dec. 22, Antara Capital owns a total of 61.81 million units of APE, which is equivalent to 8.8% of all units outstanding. The Schedule 13D notes that Antara purchased 60 million units of APE on Dec. 22 at a price of 58.22 cents per unit. In total, the transaction was worth $34.93 million.
On top of that, it appears that Antara may soon purchase APE again. The Forward Purchase Agreement between AMC and Antara states that Antara will acquire a total of 106.59 million units for an aggregate purchase price of $75.1 million. The agreement is subject to customary closing conditions and the “expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.”
The FPA also states that AMC must hold a meeting of special stockholders within 90 days of the agreement date of Dec. 22. At the meeting, a vote will be taken to increase the number of authorized shares of Class A common stock to a number that will satisfy the conversion of all outstanding Series A convertible participating preferred stock into common stock. A vote will also be taken to initiate a 10-for-1 reverse stock split.
In the Schedule 13D filing, Antara disclosed that it will review its investment on a continuing basis. This means that the firm may buy, sell, or hedge APE based on industry, market, and price conditions.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.