Exclusive-AMC’s CEO Says More Meme Stock Deals Are Coming

Milken Institute Global Conference 2021
FILE PHOTO: Adam Aron, Chairman and CEO of AMC Entertainment, speaks at the Milken Institute Global Conference 2021 in Beverly Hills, California, U.S. October 18, 2021. REUTERS/David Swanson

March 28, 2022

By Mike Spector

(Reuters) – Adam Aron, chief executive officer of AMC Entertainment Holdings Inc, said the cinema chain will make more “transformation deals” to capitalize on retail interest after its bet on a troubled gold and silver miner.

AMC announced a $27.9 million investment for a 22 percent stake in Hycroft Mining Holding Corp. about two weeks ago. known, an unusual deal for a company that operates more than 900 cinemas worldwide that raised the eyebrows of market watchers.

AMC’s investment required a $1.8 billion “war chest,” which it raised by selling its stock on the open market in 2021, partly at the back of retail investors who turned it into a popular “meme.” “-share converted.

Aron said in a phone interview from a Los Angeles limousine en route to the Academy Awards on Sunday that AMC’s investment in Hycroft has performed well from the start. AMC bought Hycroft shares for $1.07 and they traded for $1.32 last week.

“I wish there would be more third-party external M&A announcements in the future where AMC can reach for the stars and intriguing investments with potentially attractive returns,” Aron told Reuters.

AMC’s stock had fallen to around $14 in mid-March but rallied back above $20 following the Hycroft investment.

Hycroft, which was on the brink of bankruptcy from a cash injection from AMC and longtime precious metals investor Eric Sprott, said Friday it subsequently raised nearly $195 million through open market share sales as other investors followed Aron’s lead.

Aron said he expects AMC’s investment, which includes stocks and warrants, to be “lucrative.” The deal was announced on March 15, a day after Aron toured the company’s mining operations in northern Nevada, outside of Winnemucca, not far from the site of the annual Burning Man arts and music festival.

Some analysts questioned AMC’s investment, voicing concerns that the bet is far from the company’s core competency and wondered if the money could be better spent paying down the chain’s debt, which is due in late 2021 May 5 exceeded billions of dollars.

“Transformative Mergers and Acquisitions”

Aron defended the bet on Hycroft in the Reuters interview, arguing that it drew on AMC’s own experience of avoiding bankruptcy less than two years ago and noted that it had the support of retail investors.

“Transformative M&A are mandatory. Our shareholder base has given us capital to deploy with a clear expectation that we will… do exciting things with the money they have entrusted to us,” Aron said.

He added that the nearly $28 million investment is small compared to AMC’s total cash position and that the company will nevertheless strengthen and expand its core business. Citing AMC’s recent acquisition of former Arclight and Pacific theater sites, he said the company has plans to add more premium screens at existing theaters and pay off some of its debt.

Aron said Hycroft is a company with solid assets that was facing a liquidity crisis that reminded him of AMC’s plight not long ago. Sprott’s commitment boosted Aron’s self-confidence, he said.

“Although the Hycroft investment is quite a distance from home, it draws on a core competency of our business to understand balance sheets, raise cash and solve liquidity problems,” Aron said.


New business won’t necessarily be that off-the-beaten-track for AMC, Aron said, citing the company’s recent decision to launch a co-branded credit card and its move to sell branded popcorn in retail stores.

The common denominator, he said, will be shareholder feedback. He now tweets almost once a day and follows about 2,500 individual AMC investors on the social media site.

Aron’s tweets have been read more than 200 million times since April, he said. He added that he’s also hosted sneak previews of films for some of those investors and expects to do maybe a dozen more this year. When it comes to earnings calls, AMC now answers questions from retail investors in addition to securities analysts.

This is a departure from the traditional conference calls and road shows that companies have relied on to communicate with institutional shareholders.

“What is different is not the need to communicate with shareholders. The difference is who the shareholders are,” Aron said.

(Reporting by Mike Spector in New York; Editing by Jane Wardell) Exclusive-AMC’s CEO Says More Meme Stock Deals Are Coming


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