AMC Entertainment has declared a special preferred stock dividend to reward investors – but the plan is essentially going to function like a stock split. So, what’s the difference? Find out everything you need to know about the AMC stock issue.
Is AMC holding a stock split?
AMC is technically not holding a stock split, but it is issuing shareholders with a special dividend in the form of preferred stock, which will result in much the same outcome.
When companies split a stock, they’re essentially increasing the number of shares available by issuing new ones to existing shareholders. This AMC special dividend will work slightly differently, as shareholders won’t receive additional shares of AMC, but will get one share of a new preferred stock that will trade as ‘APE’.
Although some have said this is essentially creating a 2-for-1 stock split – as for every share of AMC held, an investor will receive a share of APE – it depends on these preferred shares being converted into common shares at a later date. AMC shareholders will have to hold a vote to allow this to happen. It’s worth noting that last year, AMC shareholders did not support a request to increase the number of authorised common shares.
So, if you have five shares of AMC at the close of play on August 19, you’d still have your holding plus five shares of the new APE preferred equity units. And at some point in the future, you might get the chance to convert your 5 APE shares into AMC common shares.
The new shares will list on the New York Stock Exchange under the ticker ‘APE’ – as a nod to the investors who turned the company into a meme stock in 2021, who call themselves ‘apes’ or the ‘ape nation’. These shares will have the same voting rights as the existing common shares.
Learn about the different types of shares.
Why is AMC splitting its shares?
AMC is splitting its shares as a means of paying down outstanding debt, making it more attractive to new investment. AMC currently has $5.5 billion in outstanding debt, and the company is authorised to issue up to 4.5 billion preferred shares of APE in the future to raise cash which could pay this off.
Who qualifies for AMC’s special dividend?
The special dividend will go to shareholders on record as of August 15 and will be paid at the close of business on August 19.
The ex-dividend date is set on August 22 – so if you sell your shares before then, the person you sell them to will be entitled to the new APE shares.
How to trade AMC Entertainment with FOREX.com
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- Open a FOREX.com account, or log in if you’re already a customer
- Search for ‘AMC’ in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
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