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AMC files to sell shares of Ape to pay down debts

Yahoo Finance Live anchors discuss AMC’s decision to sell shares of Ape.

Video transcript

BRIAN SOZZI: Hello, hello. As we await today's opening bell on Wall Street, there are a few hot tickers on the Yahoo Finance platform this morning. First up is the always volatile AMC and really an ugly session or a close yesterday for AMC. The basic gist is this. They're looking to sell more of these Ape preferred shares that could potentially raise up to $1.6 billion from this. So the basic read was that this is negative for AMC stock, perhaps better for Ape. But again, these tickers have been hot on our platform in the past 24 hours. It makes sense. This is always a volatile name, especially around developments like this when AMC tries to raise cash to pay down debt.

BRAD SMITH: Right, looking to raise this, kind of pay down some of their general corporate expenses. But for all of what AMC has done to try and shore up liquidity, just to navigate whatever the reopening process continues to look like for movie theaters and in the face of-- I mean, they've been able to benefit a little bit from some of the big titles that have come to theaters. But it's largely the shift in how consumers are willing to spend those dollars and in an inflationary environment, too, where I've perhaps seen the most movies of any year, recent years, this year because of titles.

BRIAN SOZZI: Thanks for the invite. Appreciate it.

BRAD SMITH: Yeah, I'm sorry. It's usually a last minute decision.

BRIAN SOZZI: All right.

BRAD SMITH: I've got to do some--

JULIE HYMAN: Have you seen anything since "The Woman King"? That was the last one we talked about.

BRAD SMITH: Well, no, that's the last big one, right?

JULIE HYMAN: That was just a couple of weeks ago.

BRAD SMITH: Right, I'm not going to go see "Avatar," the original one, again because that just got rereleased. But I think it really is on the strength of titles that AMC has to bank on, as well as the availability for some of the customers that are there to also just continue to go back for whatever that movie might be at a time where, also, why are we going to get a resurgence or a reboot of MoviePass, too? And so--

JULIE HYMAN: Oh, gosh.

BRAD SMITH: --al of that considered, you're going to see more of the AMC stubs list members try to get wooed by an AMC to just continue to come back for any movie title. But they're not going to do that. I don't think that's going to be the reality.

JULIE HYMAN: Well, the bottom line is, AMC needs more cash, right? And the fact that it is raising that cash should-- I mean, the company has always been very transparent about that, that it was going to continue to do this, that it might sell more of these Ape shares, right? But the fact that they're doing it, that they still need to tap the markets, and that they are tapping the markets in a rising interest rate environment because there was the report on Friday that it was considering refinancing some of its debt.

Now you're going to refinance debt right now? I don't know what they're paying now that they're going to refinance at a lower-- I don't know. It's just, like, this engineering that Adam Aron continues to do at the company, which has helped it, by and large, in the eyes of investors. At some point, you got to-- I don't know-- you've got to pay the piper.

BRIAN SOZZI: I did like them. To loosely tie this, I like that Adam spent the weekend with AMC shareholders, visiting-- they watched "Avatar" in the movie theater. I wish more-- I get it on that. I get it. I know what he's trying to do. I know he's hyping it. But look, I wish more executives went out and dealt with the commoners. Maybe I should go out and buy one share of Ben, Bath & Beyond, and maybe new CEO Sue Gove would walk some stores with me. I mean, that would be great. Get out there. Go talk to your shareholders. Walk these stores. Tell us your transformation plan. I like what Adam's doing. I really like it. I'll go watch a movie with him.

BRAD SMITH: Well, they've got to remain extremely bullish on themselves, especially at a time where Cineworld is going through its own issues, which AMC then had to address at the mid-point of August and talking about their liquidity ending the second quarter with more than a billion dollars in liquidity, only thanks to significant amounts of cash raised in calendar years 2020 and 2021. And so it seems like even more of that cash is going to be necessary in the near term to also mitigate AMC from some of the similar macro issues that a Cineworld maybe facing, too.