AMC Entertainment Faces Securities Class Action
WASHINGTON, DC (January 15, 2018) — U.S. Market Advisors Law Group PLLC announces that a securities class action has been filed against AMC Entertainment Holdings, Inc. (NYSE:AMC). The class action is on behalf of investors who acquired AMC common stock between December 20, 2016 and August 1, 2017, including from a February 8, 2017 secondary public offering.
Investors with losses have until March 13, 2018 to ask the Court to appoint you as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class. Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
AMC Background
AMC is a holding company that describes itself as the world’s largest
theatrical exhibition company. Having recently completed a string of acquisitions, AMC currently owns and operates the world’s largest chain of movie theaters. As of December 31, 2016, the Company owned, operated or held interests in 660 theaters with a total of 8,293 screens in the United States and 246 theaters and 2,265 screens in the United Kingdom and Europe.
On March 3, 2016, AMC and Carmike Cinemas, Inc. announced that
they had entered into a definitive merger agreement. Pursuant to the merger agreement, AMC agreed to acquire all of the outstanding shares of Carmike for $30.00 per share in cash, or approximately $757 million. In connection with the merger agreement, AMC agreed to enter into debt financing commitment letter, which provided for loans to fund the acquisition.
On November 30, 2016, AMC completed the acquisition of the outstanding equity of Odeon and UCI Cinemas Holdings Limited for $637 million, comprising $480.3 million in cash and $156.7 million in common stock. In connection with the acquisition, AMC also paid Odeon’s indebtedness totaling $593.2 million.
On January 23, 2017, AMC announced it had agreed to acquire Stockholm-based Nordic Cinema Group Holding AB, the largest theater exhibitor in seven countries in Scandinavia and the Nordic and Baltic regions, from a European private equity firm and a Swedish media group in an all-cash transaction valued at $929 million.
AMC incurred various forms of debt to finance the above-noted acquisitions. In particular, in connection with the Carmike acquisition, AMC entered into a $350 million bridge loan agreement with affiliates of Citigroup, Merrill Lynch, Barclays, Credit Suisse and HSBC Securities (USA) Inc., each of whom were underwriters in the SPO. Under the terms of the agreement with these lenders, more than $30 million of the proceeds received by AMC in the SPO was to be used to repay the above-noted bridge loan.
On February 9, 2017, AMC filed with the SEC a prospectus the for the SPO offering to register for sale 21,904,761 common shares (including 2,857,142 common shares pursuant to an overallotment option issued to the Underwriter Defendants) to be issued by AMC at a price of $31.50 per share. The Company sold 20,330,874 common shares to the public in the SPO and received net proceeds of approximately $618 million therefrom.
Allegations Against AMC
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse facts regarding the Company’s business and prospects in its Registration Statement and Prospectus regarding Carmike’s revenue growth and omitted material facts and included materially inaccurate statements associated with AMC’s newly acquired international business. Specifically, the complaint alleges that defendants failed to disclose that: (1) Carmike’s operations had been experiencing a prolonged period of financial underperformance due to a protracted period of underinvestment in its theaters; (2) Carmike had experienced a significant loss in market share when its loyal patrons migrated to competitors that had renovated and upgraded their theaters; (3) AMC was able to retain only a very small number of Carmike’s loyalty program members after the Carmike acquisition; (4) these issues were then having a material adverse effect on Carmike’s operations and theater attendance; and (5) as a result of defendants’ false statements and/or omissions, the price of AMC common shares was artificially inflated during the Class Period, trading above $35 per share.
On August 1, 2017, after market hours, AMC announced its preliminary second quarter 2017 financial results, revealing that it estimated to report total second quarter revenues of about $1.2 billion and a net loss of about $178.5 to $174.5 million, or a loss of $1.36 to $1.34 per diluted share. AMC also said that its 2017 revenues were expected to range between $5.10 and $5.23 billion and its 2017 net loss between $150 and $125 million, or a loss of $1.17 to $0.97 per diluted share.
As a result of these disappointing figures, AMC stock dropped roughly 27% to close at $15.20 per share on August 2, 2017, or more than 50% below the price at which the shares were sold in the SPO.
About USMA Law Group
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
Contact
David P. Abel
(202) 274-0237
[email protected]