#SaveAMC literally saved AMC
- Movie theater chain AMC needed to raise hundreds of millions of dollars in 2020.
- Initial sources of cash were not enough to survive the pandemic.
- Retail investors took the trending hashtag #SaveAMC litterarly
Movie theater chain AMC Entertainment Holdings Inc (NYSE: AMC) financially benefited to the tune of hundreds of millions of dollars, thanks to the proliferation of the #SaveAMC hashtag, The Wall Street Journal reported.
AMC’s early-day troubles
AMC realized in January 2020 it will likely face a crisis that would pose a major risk to its business. The movie theater chain had no choice but to shut each and everyone one of its roughly 1,000 theaters across the world and furlough the vast majority of its 30,000 workers.
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AMC CFO Sean Goodman was new to the job in early 2020 and felt it was necessary to draw the maximum amount of capital from the company’s credit lines. He spoke with more than a dozen members of Congress to secure additional funding but was unsuccessful in doing so.
It wasn’t until April the company raised $500 million through the bond market. At the time, AMC executives felt it was enough to secure its future. But the half a billion dollars didn’t last long as the pandemic showed no signs of easing.
AMC was running low on cash and faced pressure from investment fund Apollo Global Management who was a major holder of the company’s senior loans. The fund pushed AMC to file for bankruptcy in a move that would have given it ownership of the movie theater chain, according to WSJ.
MAnagement appears to have felt the only option was to work on a Chapter 11 bankruptcy plan while simultaneously raising money in the hopes of avoiding bankruptcy. Consider it a classic example of prepare for the worst, hope for the best.
The company took its chances with issuing new stock to the public in August. Many investors were willing to take a chance on a pure-play post-COVID recovery stock.
AMC ended up raising $160 million — enough to stay afloat for the time being.
Losing more money once re-opened
After raising $160 million, AMC got the green light to re-open some theaters in certain regions. But the company quickly realized it was losing more money when it was open. Management felt it prudent to remain open to signal confidence to the public.
The company found itself in a familiar position of needing cash, and lots of it. This time around it was dealt a lifeline from Redditors betting big on troubled companies and taking a stand against hedge funds that shorted iconic American companies.
This time around, the retail investors were eager to accumulate AMC’s new shares it was offering to the public. The trending hashtag #SaveAMC may have literally saved AMC as the company successfully raised $917 million.
“The retail investor clearly had more faith in the long-term viability of this company than a lot of the institutional investors did,” AMC’s investment banker Navid Mahmoodzadegan told WSJ.