AMC falls after Cineworld's bankruptcy warning on day 'APE' starts trading

AMC Entertainment Holdings' shares tumbled nearly 30 per cent on Monday (Aug 22) after UK-based Cineworld's warning of a possible bankruptcy spooked investors on the same day the American cinema chain's preferred stock listing began trading.
 

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AMC's preferred stock, trading under the ticker "APE", opened at US$6.95 on the New York Stock Exchange on Monday. The shares, intended as dividend, will have the same voting rights as common stock and could be used for raising capital in the future, the company said.
 

Trading of both classes of shares was halted multiple times in volatile trading.
 

AMC and APE shares were together trading at US$21.21, which is higher than AMC's last closing price of US$18.02, according to Reuters calculation.
 

"The issue is that the APE security (dividend) is a dilutive security that should be viewed like a 2 for 1 split," said Thomas Hayes, chairman of Green Hill Capital.
 

AMC is "pretending to give existing shareholders something of value, but in reality they are just paving the road for future dilution."
 

The decline in AMC shares was sparked after Cineworld, which owns Regal cinemas in the United States, warned that it is staring at a possible bankruptcy filing as it struggles to cut debts that soared during the pandemic.