AMC Entertainment Holdings Inc. reported better-than-expected second-quarter outcomes on Tuesday, however may face the danger of chapter if its inventory conversion battle fails and Hollywood strikes drag on for months, warns Wedbush analyst Alicia Reese.
In its earnings launch, AMC
AMC,
stated that the corporate presently has no AMC Preferred Equity models
APE,
obtainable to be issued underneath its September 2022 at-the-market fairness program. This got here as one thing of a shock to Wedbush. “We thought AMC had APE shares as a back-stop should its legal case to convert APEs to AMC shares fail, but this no longer appears to be the case,” wrote Reese, in a be aware launched Tuesday. “Should its legal case fail, AMC could face bankruptcy risk if the current Hollywood labor strikes continue for months longer and cause Q4 titles to be pushed and a release slate hole in 2024.”
Related: AMC’s inventory rallies after swinging to revenue, boosted by highest quarterly attendance since 2019
Wedbush maintained its underperform score and $2 worth goal for AMC. Of eight analysts surveyed by FactSet, three have a maintain score and 5 have a promote score for AMC.
AMC’s plan to transform its AMC Preferred Equity models to widespread inventory was blocked final month when a Delaware decide rejected a settlement that might have allowed the deal to proceed. The stock-conversion plan was a part of the movie show chain and meme inventory darling’s ongoing battle to remove debt.
Related: ‘Barbenheimer’ might have sparked euphoria, however ‘cash is very tight’ for AMC, CEO warns
AMC has filed a modification in an try to deal with the Delaware courtroom’s considerations.
Wedbush’s Reese famous that AMC has chipped away at its debt within the second quarter. “AMC had $435 million in cash and $4.8 billion in debt at the end of the quarter, for net debt per share of $2.93, vs. $496 million in cash and $4.9 billion in debt at the end of the last quarter,” she wrote within the be aware Tuesday.
Related: AMC takes goal at large debt burden with ‘APE’ particular dividend
As of June 30, 2023, AMC’s obtainable liquidity was $643.4 million.
In the corporate’s earnings launch AMC CEO Adam Aron reiterated his current warning that AMC faces liquidity challenges. “Even with our $643 million of quarter-ending liquidity, our ability to continue to raise capital and remain agile are absolutely vital to maintaining our strong recovery trajectory,” he stated. “There are real and potentially severe liquidity hurdles on the horizon that we will need to overcome.”
Related: AMC has once more requested NYSE and FINRA to look into the buying and selling of its inventory
Shares of the movie show chain and meme inventory darling rose 0.1% Tuesday, in contrast with the S&P 500 index’s
SPX
decline of 0.6%. The APEs fell 1.7% Tuesday.
Source web site: www.marketwatch.com
