AMC Theatres' 2nd Biggest Shareholder Sells Stock for $113 Million Profit

AMC Theatres' 2nd Biggest Shareholder Sells Stock for $113 Million Profit

Silver Lake Partners, AMC’s once second biggest shareholder, just sold all of their shares for a profit, the first time they’ve been able to.

Silver Lake Partners, AMC’s once second biggest shareholder, just sold all of their shares for a profit, the first time they’ve been able to.

Credit | AMC Theatres

Silver Lake Partners, AMC’s 2nd biggest shareholder, or at least once 2nd biggest, just disclosed in a regulatory filing, that it has sold all of its equity in AMC, including its recently converted debt in the company.

The private equity firm collected $713 million for its sale on Thursday, turning a $113 million profit on its original investment of $600 million, at least according to the filing that you can find here.

The move, which was shocking but not surprising, came after AMC’s share price skyrocketed as much as 370%, in pursuit of GameStop’s short squeeze. In an opportune timing for Silver Lake, the company was able to liquidate all of their stock, ridding themselves of their long-term, declining valued investment.

Who is AMC?

AMC, for those of you that don’t know, is the world’s largest movie theater chain, in the US and the world. Just as a scale for how massive the company is, they have over 1000 theaters across the world, with over 11 thousand screens globally.

The company makes more than $5 billion in revenue per year, with net income having dropped over the few years, leading to the stock’s upwards of 90% drop, at least up until the massive spike. While yes, the stock deserved to drop a little bit for lowering revenue and net income losses, it didn’t deserve an 82% decrease in 2 year.

Shares for the company, at one point, traded for a price/sales ratio as little as 0.04. Compared to the average of 2.72 in the S&P 500, AMC traded at little over 1% the average PS ratio. That’s insane. Even after the jump, it only pushes 0.4 P/S, showing just how much these short sellers have been dragging down the stock, even though it didn’t deserve a drop that big.

Silver Lake’s recent moves

The massive surge in AMC stock, which Silver Lake previously owned 28% of, let the company trigger $600 million in debt notes into stock. That was for a price of $13.51, a massive high for the company over the last few years.

Silver Lake was able to sell all of its equity, including $600 million in debt for $16.05/share. The firm originally picked up $600 million in debt from AMC in 2018, then putting 100 million into the company as the pandemic destroyed its business. AMC even went as far as to say that the company might file for bankruptcy, even as Silver Lake attempted to keep the theater company afloat.

Wanda Group is the other major shareholder in AMC, although they seem to be holding onto their dropping investment in the company. This equity firm bought AMC entirely for around $3 billion back in 2012, then bringing the company public, retaining 50.1% of the available shares.

They eventually brought it down to 38%, with Silver Lake pushing upwards of 28% ownership, up until their selling of AMC stock, which notoriously, was in the negative for quite a while.

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Although Silver Lake Partners was a great firm for investing into AMC, hopefully this doesn’t mean a bad thing for the company. AMC Theatres has been bogged down by shorts for ages, pushing down its value to way below where it should be. Remember, the stock was down like 90% before the massive jump, really much lower than it should have been.