AMC falls after Cineworld’s bankruptcy warning on day ‘APE’ starts trading

An AMC theatre is pictured amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., January 27, 2021. REUTERS/Carlo Allegri/File PhotoRegister now for FREE unlimited access to Reuters.comRegisterAug 22 (Reuters) – AMC Entertainment Holdings’ shares (AMC.N) tumbled nearly 30% on Monday after UK-based Cineworld’s (CINE.L) warning of a possible bankruptcy spooked investors on the same day the American cinema chain’s preferred stock listing began trading.AMC’s preferred stock, trading under the ticker “APE”, opened at $6.95 on the New York Stock Exchange on Monday. The shares, intended as dividend, will have the same voting rights as common stock and could be used for raising capital in the future, the company said.Trading of both classes of shares was halted multiple times in volatile trading.Register now for FREE unlimited access to Reuters.comRegisterAMC and APE shares were together trading at $21.21, which is higher than AMC’s last closing price of $18.02, according to Reuters calculation.”The issue is that the APE security (dividend) is a dilutive security that should be viewed like a 2 for 1 split,” said Thomas Hayes, chairman of Green Hill Capital.AMC is “pretending to give existing shareholders something of value, but in reality they are just paving the road for future dilution.”The decline in AMC shares was sparked after Cineworld, which owns Regal cinemas in the United States, warned that it is staring at a possible bankruptcy filing as it struggles to cut debts that soared during the pandemic. read more Retail favorite AMC reiterated on Friday a “relatively weak” film slate in the third quarter of 2022.The COVID-19 lockdowns severely impacted the business of cinema operators. However, AMC managed to raise $1.8 billion in 2021, capitalizing on the rally triggered by retail investors’ interest in meme stocks, in a sharp contrast to Cineworld’s fate. read more AMC shares have jumped over 150% since the end of 2019, whereas Cineworld lost about 99% of its share value in the same period.Other retail favorites accelerated recent losses with Bed Bath & Beyond Inc (BBBY.O) down 3% and Vinco Ventures (BBBY.O) shedding 9%.Register now for FREE unlimited access to Reuters.comRegisterReporting by Medha Singh, Anisha Sircar, Bansari Mayur Kamdar and Nivedita Balu in Bengaluru; Editing by Shinjini GanguliOur Standards: The Thomson Reuters Trust Principles.

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