AMC said in a securities filing that it raised $230.5 million through a stock exchange to Mudrick Capital Management. The theatre company said it would use the funds for possible acquisitions, updating its theaters and deleveraging its balance sheet.
Shares were up 23% in afternoon trading.
On Tuesday afternoon, Bloomberg News reported that Mudrick had sold all of its new shares in AMC. The stock fell from its highs of the day following the report.
AMC's business was effectively stopped during the pandemic, with picture theaters closed in most of the country for months and important studios slowing releases throughout the pandemic. On the other hand, the stock became a popular of dealers on Reddit and has seen wild swings in recent months.
The business has taken advantage of those cost surges by selling additional shares to raise cash. The stock is up more than 1,000% year to date.
"Given that AMC is increasing hundreds of millions of dollars, this is a very positive outcome for our shareholders," CEO and President Adam Aron said in a filing. "It was achieved through the issuance of only 8.5 million shares, representing less than 1.7percent of our issued share capital and only a small portion of our average daily trading volume"
The dramatic price swings could also be due to a brief squeeze in the inventory, which results from traders who have bet against the inventory purchasing stocks to limit their losses. Roughly 20 percent of those floated shares of this company are sold short, according to S3 Partners.
AMC has approximately $5 billion in debt and needed to increase $450 million in lease payments because its revenue largely dried up during the pandemic. Theaters were closed for months to help block the spread of the virus, and as soon as the company reopened its doors, few customers felt comfortable attending screenings, and movie studios held new releases back.
Now, as vaccination rates increase and the amount of coronavirus cases decrease, customer confidence in returning to film theaters has spiked. Not to mention, studios are finally releasing content that is new.