Earlier this week, it was announced that shareholders of AMC Entertainment (NYSE:AMC) and AMC Entertainment Preferred Equity Units (NYSE:APE) had voted in favor of proposals to enact a 1-for-10 reverse stock split and to increase authorized shares for AMC. Together, these proposals would allow for the conversion of APE into AMC stock.
The ability for APE shareholders to vote on AMC matters was highly controversial and resulted in two putative stockholder class action complaints. These complaints led to a status quo order that prevents AMC from enacting the reverse split and increase in authorized shares until a ruling can be reached on the preliminary injunction motion scheduled for April 27.
Now, though, attention has shifted to a major sale from AMC financier Antara Capital. Let’s get into the details.
AMC Stock: Antara Just Sold 48 Million APE Shares
Yesterday, Antara sold 48 million shares of APE at an average price of $1.51 per share. In total, the sale was worth $72.48 million. Following the transaction, Antara still owns 179.23 million shares. On Feb. 7, AMC reported issuing 197.62 million shares of APE to Antara pursuant to a forward purchase agreement.
This sale shouldn’t come as much of surprise, as AMC had previously filed a prospectus supplement to document the resale of up to 232.43 million shares exclusively for Antara. In the selling stockholder section, it noted that Antara owned 232.43 million shares of APE as of March 8. That is equivalent to a 24.78% ownership stake. Following the completion of the offering, Antara would own zero shares. In other words, the resale documents Antara’s sale of its entire APE stake.
By providing capital to AMC, Antara would receive a significant number of shares that it can turn around and sell for a profit. AMC benefitted by buying back debt in the form of notes and receiving purchase consideration for the APE shares.
Meanwhile, shareholders are waiting patiently for the preliminary injunction motion ruling. InvestorPlace’s Thomas Yeung believes AMC is worth between $1.80 and $2.35 if the court allows the conversion to take place.
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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.
