Another day, another sale of AMC Preferred Equity Units (NYSE:APE) for Antara Capital. Yesterday, the AMC Entertainment (NYSE:AMC) lender disclosed selling 7.99 million units at average prices ranging between $1.73 and $1.72. In total, the transaction was worth $13.81 million. Following the sale, Antara still owns 93.91 million units of APE. AMC stock is down about 1.5%, and APE stock is up about 1% this morning.
Antara has now sold APE almost every other day this month, although this was warned well in advance. Back in March, AMC filed for a resale of up to 232.49 million shares of APE exclusively for Antara. This lined up with Antara’s stake as a whole. Completion of the resale as a whole would represent 24.78% of APE outstanding prior to the offering. The filing also noted that Antara would cease to own a stake in APE following the resale.
AMC Stock: Antara Sells APE Preferred Shares
Antara has been slowly offloading its stake in order to cause the least amount of price disruption to APE stock as possible. This seems like the most rational strategy in order to maintain the price of APE for future sales. On average, 13.07 million units of APE switch hands per day.
However, dumping over 200 million shares on the market will still have an effect on APE. In its resale filing, AMC warned that:
“There has been significant recent dilution and there may continue to be additional future dilution of our Class A common stock and AMC Preferred Equity Units, which could adversely affect the market price of shares of our Class A common stock and AMC Preferred Equity Units.”
AMC also warned that its shares outstanding increased by 467.11 million from January 2020 to March 2023. This was attributed to several factors, such as the conversion of Class B stock, note exchanges, and equity grant vesting.
Meanwhile, both AMC and APE shareholders will soon experience a major catalyst. Today, the court hearings to decide the conversion of outstanding APE into AMC will conclude. Before the hearing, Special Master Corinne Elise Amato issued a recommendation in favor of the conversion. The conversion would add to AMC’s equity position by about $16 billion while simultaneously diluting AMC stockholders.
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.
