AMC ruling opens door for $16B equity raise, says B. Riley

B. Riley analyst Eric Wold keeps a Neutral rating on AMC Entertainment with a $4.50 price target after after Vice Chancellor Morgan Zurn of the Delaware Court of Chancery approved the amended settlement terms, which cleared the final hurdle that prevented the company from moving forward with the shareholder-approved conversion of APE units to AMC common. With the current projection that AMC is unlikely to move into positive free cash flow territory until 2025 and the ongoing actors and writers strikes increasing film slate uncertainty in 2024, the company needed access to additional liquidity to avoid a situation where equity shareholders may have been left without anything, the analyst tells investors in a research note. The firm estimates the APE-to-AMC conversion and simultaneous 1-for-10 reverse split could open the door for AMC to raise as much as $16B in incremental equity. Shares of AMC are down 37% to $3.30 in early trading.