AMC Entertainment Holdings Inc. CEO Adam Aron has urged investors not to get carried away with the blockbuster opening weekend for “Barbie” and “Oppenheimer,” citing the ongoing challenges facing the movie-theater chain and meme-stock darling.
“Barbie” and “Oppenheimer,” two of the year’s most eagerly-anticipated movies, opened on July 21, sparking an internet phenomenon dubbed “Barbenheimer.”
“It sure feels fabulous to see that our theatres are packed,” Aron tweeted Monday, adding that “Barbenheimer” resulted in AMC’s
AMC,
busiest weekend in four years, both in the U.S. and in Europe. In the U.S., Saturday’s single-day numbers were the fifth-highest ticket revenues and second-highest food and beverage revenues in AMC’s 103-year history, he added.
Related: AMC had its busiest weekend since 2019, boosted by ‘Barbie’ and ‘Oppenheimer’
“These are such hopeful signs for our eventual recovery in the years ahead. BUT, we should not let ourselves be confused by the euphoria arising from this weekend’s huge box-office numbers,” Aron wrote. “Moviegoing in 2023 still will be well below 2019 pre-COVID levels. The writers and actors strikes create uncertainty ahead. And cash is very tight.”
“We still will have to manage our company with all of our smarts and all of our skill to get to the promised land,” he added.
AMC’s plan to convert its AMC Preferred Equity
APE,
units to common stock was blocked Friday when a Delaware judge rejected a settlement that would have allowed the deal to proceed. The stock-conversion plan was part of the company’s ongoing battle to eliminate debt.
Related: What’s next for AMC after court blocks its APE-conversion plan?
In a letter to investors that was posted Sunday on Twitter, Aron warned that if the company is 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).”
AMC has filed a modification in an attempt to address the Delaware court’s concerns, according to Aron.
As of March 31, AMC’s cash position was $495.6 million, down from $631.5 million in the same period last year.
Related: How will ‘Barbie’ mania impact Mattel earnings?
Shares of AMC skyrocketed 33% on Monday following the court ruling, before retreating 11.5% Tuesday.
The broader ramifications of AMC’s court setback are still being weighed. “The Delaware Chancery Court ruling by Vice Chancellor Morgan Zurn threw a monkey wrench into the AMC Entertainment Holdings Inc (AMC) and AMC Preferred Equity Units (APE) arbitrage trade by not agreeing to the proposed class action settlement,” wrote analyst Ihor Dusaniwsky of S3 Partners, in a note Tuesday.
Timing is everything, according to Dusaniwsky. “If you entered the AMC–APE arb trade on December 22, 2022 when the end of day spread was $7.19 (the largest spread between the two securities) and exited your arb trade on Dec 27th when the end of day spread was $2.12 (the smallest spread between the two securities) you would be up $494,000 in net-of-financing mark-to-market profits, a 487% return on average collateral posted for the trade in less than a month,” he wrote. “Trade identification and execution is what makes a profitable trade, which although difficult can be much more fun than a barrel of monkeys.”
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