Shares of AMC Entertainment dropped 5.7% after the theatre operator filed a shelf offering with the SEC (Securities and Exchange Commission) to sell 50 million shares to raise up to $125 million in proceeds.
The announcement comes after AMC (AMC) had offered 200 million shares for sale earlier this month to keep its business afloat.
According to the SEC filing, the embattled theatre chain has sold roughly 38 million shares out of the 200 million shares available and raised about $104.2 million, as of Dec. 28.
The company said, “Our ability to obtain additional liquidity, which if not realized or insufficient to generate the material amounts of additional liquidity that will be required until we are able to achieve more normalized levels of operating revenues, likely would result with us seeking an in-court or out-of-court restructuring of our liabilities, and in the event of such future liquidation or bankruptcy proceeding, holders of our common stock and other securities would likely suffer a total loss of their investment.” (See AMC stock analysis on TipRanks)
Meanwhile, AMC stock has tanked over 70% year-to-date as the cash-strapped company is fighting to stave off bankruptcy amid the pandemic-led theatre closures.
Earlier in November, Barrington analyst James Goss maintained his Hold rating on AMC stock. In a note to investors, Goss said, “AMC has taken numerous actions to improve its financial position. However, significant uncertainty remains for the company due to the high degree of leverage in its business model.”
In view of AMC’s financial challenges, analysts have taken a cautiously bearish outlook on the stock. The Moderate Sell consensus shows 4 Holds and 2 Sells. Meanwhile, the average analyst price target stands at $2.51 and implies 16.2% upside potential over the coming year.
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