AMC hires Citigroup as a preferred stock underwriter

AMC hires Citigroup as a preferred stock underwriter

(Reuters) – AMC Entertainment (NYSE:) Holdings Inc said on Monday it has hired City Group (NYSE:) as a guarantor to help it sell up to 425 million units of its preferred stock, APE.

However, the theater chain warned potential investors that investments in APE could involve “the loss of all or a significant portion of your investment” due to recent fluctuations in the prices of preferred and underlying shares of AMC Entertainment.

AMC and preferred stocks fell about 4% each following the announcement.

The company also said Citigroup will take a 2.5% reduction per unit sold for the first total sales of $250 million of APE units, and a 1.5% reduction per unit sold for subsequent sales of $250 million. It may also sell APE units to Citigroup.

Monday’s development follows AMC Entertainment’s August 5 announcement of the APE as a special dividend for shareholders and a means to raise capital in the future.

But, the value of APE has nearly halved since it began trading on the New York Stock Exchange on August 22, while AMC itself has slumped to nearly a two-month low, as investors worry about a potential dilution of value due to the new safety.

APE holds 1/100th of a partial interest in Series A common stock in AMC Entertainment.

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