Shares of AMC Entertainment (NYSE:AMC) stock are plunging lower after the company announced a $250 million at-the-market (ATM) offering. The movie theater company can use the proceeds for several purposes, such as refinancing, redeeming or repurchasing debt, increasing liquidity and for general corporate purposes.

Unsurprisingly, shareholders aren’t too happy with the news due to its dilutive effects. AMC has now diluted its shareholders several times during the past year in order to reduce its long-term debt of $4.6 billion, $3 billion of which will be due in 2026.

“Among other reasons, the offering is being conducted to enhance our liquidity in light of the low first quarter box office, resulting in part as previously disclosed from the Writers Guild of America strike and the Screen Actors Guild-American Federation of Television and Radio Artists strike that occurred during 2023, increased seasonal working capital requirements, and the resulting cash burn we have experienced,” said AMC.

AMC Stock: AMC Announces $250 Million ATM Offering

Last week, Bloomberg reported that the company’s senior lenders engaged in discussions about the company’s debt and how to pay it down. These lenders had met in the past but had a sense of urgency due to the weak box office, according to sources familiar with the matter. These discussions could have influenced the offering.

The offering comes just a few months after AMC announced a $350 million ATM offering in December. Afterwards, the company issued another 16 million shares in exchange for debt due in 2026.

From Jan. 1, 2020, to March 24, 2024, AMC’s outstanding shares increased by a significant 258.39 million when accounting for the 1-for-10 reverse stock split.

“There has been significant recent dilution and there may continue to be significant additional future dilution of our Class A common stock, which could adversely affect the market price of shares of our Class A common stock,” warned AMC.

AMC has made it very clear that it is comfortable diluting shareholders in order to pay down its debt. And that may very well be in the company’s best interests, but not shareholders looking for a quick profit.

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.