What happened
AMC Entertainment Holdings (AMC +2.36%) CEO Adam Aron surprised investors today, announcing on Twitter the company is pulling a proposal to add shares from a shareholder vote. Investors liked the decision, and shares of the theater operator popped 6% at the market open today. As of 10:10 a.m. EDT, the stock had settled back but remained up about 2%.
So what
AMC also put out an SEC filing announcing its change of plans regarding adding 25 million shares to its treasury. But Aron's Twitter comment told more of the story. Aron had been pushing for the company's base of retail investors to back his plans to add to the outstanding share count, allowing AMC to raise more capital. The company has raised nearly $3 billion in equity and debt in the past year. But the retail investors that now make up more than 80% of shareholders didn't seem to want to dilute their shares any further.
Image source: Getty Images.
Now what
The shareholder meeting is set for July 29, and Aron had taken to social media looking for support to boost the share count. The company had about 500 million shares outstanding as of June 2. That's compared to about 104 million just one year ago. The company has struggled as theaters were closed and movie releases were delayed.
AMC used its newfound popularity as a Reddit meme stock to sell those additional shares to bolster its balance sheet. Aron has also said he wants to use new capital for potential growth acquisitions or to pay past-due rent. Aron wrote in his tweet announcing the change of plans: "I see you. I hear you. I value you." It seems he still wants to keep his shareholder base of retail investors on his side, and is respecting the lack of support for the plan.
