AN OPEN LETTER TO OUR INVESTORS ON JULY 23, 2023:
Raising fresh equity in the near term is critical to our company, so it is important that we work to address the concern raised in the Delaware Court of Chancery’s ruling on Friday.
In leading AMC through this once-in-a-century pandemic and its aftermath, I have been driven by this over-arching goal: Do not let AMC fall into financial ruin, ensure that AMC survives, put AMC on a path to eventually thrive.
Along the way, I have done my utmost to be transparent with AMC shareholders, and am doing so again right now.
AMC must be in a position to raise equity capital. I repeat, to protect AMC’s shareholder value over the long term, we MUST be able to raise equity capital.
That is especially the case now with the added uncertainty caused by the writers and actors strikes, which could delay the release of movies currently scheduled for 2024 and 2025.
If we are unable to raise equity capital, the risk materially increases of AMC conceivably running out of cash in 2024 or 2025, or of AMC being unable to satisfactorily refinance and stretch out the maturity of some of our debt (which is required of us beginning as early as 2024).
The risk of financial collapse is not whimsical. Cineworld/Regal, the second largest movie theatre chain in the world, fell into bankruptcy and their equity holders were essentially wiped out. Bed, Bath and Beyond which was viewed as the third most watched meme stock, also fell into bankruptcy and their equity holders also were essentially wiped out.
Fortunately, at AMC, we have been much smarter, much more agile and much more skillful.
We have risen to every Covid challenge heretofore, and I have every confidence in our continued ability to successfully navigate through these complicated times.
The AMC shareholders who actually voted in our March 14 special election understood all this:
72% of AMC common shareholders and 91% of APE preferred unit holders who casted votes agreed with our Board’s and my view as to how best to proceed. We appreciate their support, and genuinely know that they are in our corner. We sincerely believe we are on the surest path to ensuring AMC’s survival, by allowing us to raise equity and to do so at the highest possible price with the least amount of dilution.
With millions of shareholders, though, understandably there are many voices, many opinions and many critics. Some wish ill for the company and have nefarious aims. Some are grandstanding, and trying to gain notoriety for themselves at AMC’s expense. These individuals do not deserve your trust.
But most are well intentioned, and are motivated by varying concerns. Some are distraught if the value of their AMC shares or APE units fall. Some are skeptical and greatly troubled by how Wall Street markets function, their anger about their view of manipulative practices is constantly visible on Twitter. And many are just trying to understand how, what and why we are doing what we do. They especially are trying to figure out the impact dilution may have on their AMC investment.
To these latter groups, I would say again – AMC Entertainment must put ourselves in a position to be able to raise equity capital. That is what will make it more likely that first we survive and then that we thrive. Indeed, over the last several years, there has been an enormous short share position in AMC stock. In my view, the wisest way to defeat that short thesis is to take bankruptcy risk off the table, to the extent possible. And we do that by AMC being able to raise equity if, as and when needed.
I don’t hold these views cavalierly. Remember, I am AMC’s largest retail shareholder, with an economic interest in more than 8.3 million AMC shares or APE units. And while I did file a share selling plan in August of 2021 that was implemented over a three month period, I have not sold a single AMC share or APE unit in more than a year and a half, and have no intention of selling any shares units any time soon.
My own finances are directly aligned with yours. As I have said before, I Ride With You.
Accordingly, given the absolute imperative to be able to raise equity capital going forward, we take seriously the Court’s Friday ruling. In response, yesterday we along with the plaintiffs filed with the Delaware Court, a modification of the legal release surrounding the settlement of the Delaware litigation in an effort to address the Court’s voiced concern. If the Court agrees, it would be our hope to implement as soon as possible the plan approved in the AMC stockholders election in March.
In closing, I would remind everyone that we have several enormously popular movies in our theatres this very minute, highlighted by Barbie, Oppenheimer, sound of Freedom and Mission Impossible – Dead Reckoning Part One.
All this effort around AMC Entertainment these past three plus years has been about saving moviegoing… in theatres… in America and the world over. I encourage you all to enjoy the fruits of that labor – go see dazzling images on our huge silver screens, enjoy yourselves and go see a movie!
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