AMC attempted to buy Cineworld theaters with APE stock

The largest cinema chain in the US has been in talks to buy some Regal Cinemas — with APE units, of course, not cash.

AMC Entertainment, the largest film exhibitor chain in the US, nearly bought Cineworld theaters out of Chapter 11’s bankruptcy. The news was revealed in an 8-K filing with the SEC on Dec. 21 that surprised even some AMC employees from the inner circle, IndieWire is told. The takeover doesn’t sound like it’s happening, a person with knowledge of the talks tells us – but anything remains possible.

Cineworld’s and AMC’s lenders were in discussions “focused on acquiring certain of Cineworld’s strategic cinema assets in the United States and Europe,” including Regal Cinemas, 8-K said. The purchase would have been funded in part by the issuance of APEs by AMC and other outside financing. (Of course it would have gone through APEs. More on that in a moment.)

A “definitive agreement” between AMC Entertainment and Cineworld’s lenders “has not been reached,” and “negotiations are not proceeding at this time,” the filing reads.

On Wednesday, AMC CEO Adam Aron tweeted, “Discussions have been halted with some Cineworld lenders for AMC to acquire some Regal/Cineworld theaters, with APEs being installment payments. We are disciplined to ONLY use our cash or stock when we believe it is in the best interests of AMC shareholders to do so.”

Two days earlier, Aron said the APEs — preferred stock — raised $162 million for the company and reduced $180 million of its debt obligations that year. He has already deployed that capital by announcing that AMC has acquired a gated ArcLight Theaters location in Boston.

“While the APE units and our common stock are economically equivalent, it is disappointing that the APE units have consistently traded at a significant discount to AMC common stock since inception,” Aron said Monday. “While the trading prices of the two securities appear to reflect different market and trading dynamics, the APEs serve the precise purpose they were originally intended for.”

At the time of publication, APE shares were trading for just 70 cents apiece, down 89 percent from when they first launched in August. Who wouldn’t want that? Learn more about the APE units – including why they are called that – here.

AMC’s regular stock has also had a tough time following the huge and temporary Reddit-fuelled meme stock rally in mid-2021. AMC itself is down 83 percent this year and currently trades just over $5 a share.

People enter AMCAMC Theaters Odeon and UCI Studio 30 Theater, Olathe, Kansas, USA - May 11, 2005AMC Theaters to buy European cinema operator Odeon & UCI Cinemas Group for approximately £921 million ($1.21 billion) . AMC says Tuesday, July 12, 2016 that the transaction will make it the largest cinema operator in the world. Odeon & UCI has 242 cinemas in Europe. The deal gives AMC a total of 627 cinemas in eight countries.

AMC cinemas

Orlin Wagner/AP/Shutterstock

“We have an incredible team at Cineworld Laser who are focused on evolving our business to thrive during the cinema industry comeback,” Cineworld CEO Mooky Greidinger said in a statement accompanying his bankruptcy filing in September. “The pandemic has been an incredibly difficult time for our business, with the forced closures of theaters and tremendous disruption to film schedules bringing us to this point.”

“This latest process is part of our ongoing effort to strengthen our financial position and seek deleveraging that will create a more resilient capital structure and a more effective business,” he continued at the time. “This will allow us to continue executing our strategy to reinvent the most immersive cinematic experiences for our guests through the latest and most advanced screen formats and enhancements to our flagship cinemas. Our goal remains to further accelerate our strategy so that we can expand our position as the ‘Best Place to Watch a Movie’.”

On the same day, Aron tweeted: “Cineworld/Regal has just filed for Chapter 11 bankruptcy protection for its theaters in the US and UK. Thanks to retail! You really saved AMC.”

And AMC really didn’t save Cineworld.

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Lindsay Lowe

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