- AMC's CEO told CNBC the company has asked for approval from shareholders to authorize another 500 million shares.
- AMC first announced plans to offer the stock in March and shareholders will vote on the measure in May.
- In January, the company disclosed that it had secured enough financing to remain open and operational deep into 2021.
- Shares of the company are up more than 375% since January and its market cap currently hovers at just under $4.6 billion.
Shares of AMC Entertainment fell as much as 5% on Thursday after the company's CEO updated CNBC on its plans to seek shareholder approval to authorize an additional 500 million shares.
AMC has navigated the coronavirus pandemic through fundraising efforts that have staved off bankruptcy and allowed the movie theater chain to continue to operate, albeit at limited capacity.
In January, the company disclosed that it had secured enough financing to remain open and operational deep into 2021. However, AMC later realized it could raise even more cash and capitalize on its stock's recent Reddit-driven rally, which fueled its market value.
Shares of the company are up more than 375% since January and its market cap currently hovers at just under $4.6 billion. AMC's stock hit a 52-week low of $1.91 on Jan. 5, but then soared to $20.36, setting a 52-week high on Jan. 27.
"Dilution is something we care about, but I will say we are formally asking approval from our shareholders to authorize another 500 million new shares that the company could issue if it wishes," CEO Adam Aron said on CNBC's "Squawk on the Street." "There are a lot of benefits to our shareholders of having more authorized shares out on the market."
"We'll be sensitive to dilution issues, but at the same time there's an opportunity to bolster our cash reserves and there's an opportunity to buy back debt at a discount or pay deferred theater rents," he added. "There are a lot of good reasons for shareholders to give us the authority."
AMC first announced plans to seek the additional stock authorization in March and shareholders will vote on the measure in May.
"We have asked our shareholders to approve an increase of our authorized share capital by 500 million shares," a representative from AMC said in a statement Thursday. "This is not an approval of an actual issuance of those shares but would give AMC's board the flexibility to authorize future issuances of shares for a variety of purposes, if the board determines it is in the interests of AMC's shareholders. When you're navigating these uncharted waters of the pandemic, flexibility is a very good thing."
Aron noted that the increase in vaccinations and new movie releases is already having a positive impact for AMC. He said Wednesday's attendance for the opening of "Godzilla vs. Kong" in North America was 10 times what it has been for every other Wednesday so far in 2021.
Clarification: This story was updated with AMC's comment that it is seeking approval to increase its authorized share capital to provide it with flexibility to potentially offer stock. It is not an approval of an actual stock issuance.