AMC fairness providing is a ‘safety net’ and an opportunity to cut back debt balances, analyst says

B. Riley Securities estimates web proceeds of no less than $310 million to $315 million to AMC after commissions, charges and bills and says the corporate may nonetheless situation a big variety of shares. “Following those 40 [million] shares issued through the [at-the-market offering], we estimate the company would still have approximately 365 [million] shares authorized, but not outstanding, to potentially issue through future equity programs,” Wold wrote.

Related: AMC’s inventory climbs, boosted by $325.5 million fairness providing

In an announcement launched Wednesday, AMC stated that the fairness providing boosts its money reserves, addresses present liquidity considerations and fortifies the corporate’s steadiness sheet. AMC CEO Adam Aron has repeatedly warned that the corporate faces liquidity challenges. 

“While the company had ~$4.69 [billion] of corporate debt outstanding at the end of [the second quarter of 2023], only approximately $103 [million] of that debt is scheduled to mature in 2025 (with no maturities scheduled in 2024),” Wold wrote on Thursday.  “Nevertheless, we believe these proceeds not only provide an increased near-term liquidity safety net while the lingering Hollywood strikes potentially put the 2024 film slate at risk but also provide an opportunity for the company to reduce the principal balances for the higher interest rate debt scheduled for maturity in 2026 and beyond (especially those tranches that are trading at meaningful discounts to par in the open market).”

B. Riley Securities maintained its impartial score and $45 share-price goal for AMC.

“The only thing currently holding us back from being more positive is the higher valuation multiple relative to the other exhibitors and to pre-pandemic averages,” Wold wrote. “However, we continue to believe this can actually play into AMC’s benefit as this equity capital being raised can also be used to seek out additional movie theaters to acquire and diversify with new growth strategies potentially outside the theatrical exhibition industry — all by using equity with an elevated valuation multiple that allows AMC to make these expansion moves in a much less expensive manner.”

Related: AMC reverse inventory cut up, APE conversion take away ‘overhang,’ analyst says in improve

Of eight analysts surveyed by FactSet, 4 have a maintain score and 4 have a promote score for AMC.

AMC’s inventory, which underwent a 1-for-10 reverse inventory cut up in late August, has fallen 79.7% previously three months, in contrast with the S&P 500 index’s 
SPX
 achieve of 1.4%.