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With more shares available in the market, institutions who traded naked shares could cover their butts instead of buying from the retail investor.Īs you can tell, there are both PROS and CONS to a dilution.
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If the issue of 500 million additional shares is approved then AMC’s share price could potentially go down.ĪMC entertainment will have money to payoff any small debt they have leftover quickly, and it will benefit the business long-term. In other words, issuing 500 million shares provides the business with leverage. If shareholders don’t approve this, AMC will simply have to pay it’s dues as they profit instead of all at once.
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AMC Entertainment simply wants a backup plan should another catastrophic event occur again that would affect the business. What if we don’t approve the issue of 500 million more shares? It would grant them with the flexibility to grant them when needed. If approved, it wouldn’t mean they issue all 500 million shares at once. Why does AMC want to issue more shares?Īpproving the issue of 500 million shares will allow AMC Entertainment to payoff what debt they have left much quicker. This caused AMC’s stock price to slide because the dilution would mean short-term turmoil for the stock. AMC’s CEO and President Adam Aron is asking its shareholders for approval on issuing 500 million more AMC shares.