AMC Entertainment is setting the table to sell up to 40 million shares, which it can now do with stockholder approval and after it dispensed with its APE units.

But just because stockholders approved a sale doesn’t mean they’re happy with the move, which dilutes their holdings. AMC shares are down more than 20% in mid-morning trade at about $10.81. The shares have more wiggle room now, however, thanks to a recent 10 for 1 reverse stock split, one of a series of maneuvers in what’s been a nail-biter of a summer for the giant theater chain.

The prospectus filed with the SEC doesn’t obligate AMC to sell shares but means it has them at the ready if it needs to raise cash to support an improved but still vulnerable business. AMC said it intends to use net proceeds from any sale to bolster liquidity, to repay, refinance, redeem or repurchase existing debt and for general corporate purposes.

The company has been the beneficiary of a booming summer box office and recently announced it is distributing, and playing in its theaters, Taylor Swift: The Eras Tour this October with massive presales shattering records. That said, the recovery from Covid was slow, prolonged Hollywood strikes have started to shift the movie release schedule, and the company’s debt is high. AMC CEO Adam Aron has repeatedly insisted that it’s imperative the chain has the flexibility to sell stock if needed.

AMC’s unusually large base of retail shareholders had resisted stock sales but they were approved – along with the revers stock split and the conversion of AMC Preferred Equity units into common shares — at a special meeting last spring. Implementation was held up by a stockholder lawsuit in Delaware Chancery Court that was resolved last month.

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