Cash is King, Says Under-Fire AMC CEO After Equity Raise

AMC Entertainment Holdings, Inc. (AMC) CEO Adam Aron has been under scrutiny recently for the company's equity raise, which brought in approximately $350 million. Despite the criticism, Aron maintains that the move was necessary to strengthen AMC's financial position and navigate industry challenges. In an interview with CNBC, Aron stated, "We realize that there are some who question these strategies in social media, and sometimes loudly. But they do not shoulder the responsibility of guiding a multi-billion dollar enterprise through highly challenging circumstances, and they fundamentally do not understand how absolutely vital — indeed essential — it is that AMC have robust cash reserves."

AMC's recent equity raise, combined with other equity sales throughout fiscal year 2023, totaled $865 million. Additionally, the company disclosed that it had engaged in debt repurchases and exchanges for equity, resulting in a $62.28 million reduction of liabilities. These financial maneuvers have helped AMC strengthen its balance sheet and diversify its revenue streams. However, despite these efforts, AMC's share price has experienced significant dilution and has plummeted by 77% year to date. This has sparked criticism of Aron for implementing strategies perceived as unfriendly to shareholders.

Aron addressed these concerns on his X profile, countering the critics by emphasizing the importance of the substantial amount of cash raised by the company. "Our successfully raising a boatload of cash is extremely good news to relay to those who care about AMC’s future, and correspondingly extremely bad news to those who wish AMC harm," he wrote. Aron's base salary was $1.5 million in 2023, flat from $1.5 million in 2022 and from $1.45 million a year earlier. He took home a bonus of $5 million in 2000, but received no bonus during the last two years. CFO Sean Goodman received $6.8 million in overall compensation in 2023, against a $6.27 million pay package in 2022. His latest compensation included a $450,000 cash bonus.

AMC continues to take part in an industry-wide box office recovery, and contend with the fallout from the dual Hollywood strikes and changing consumer habits in the age of streaming. The cinema chain giant is also looking to raise fresh cash, where possible, to run the business and offset the company’s high debt load. Despite the challenges, AMC has demonstrated a progressive increase in revenue each quarter and has achieved increasingly robust EBITDA figures. In the third quarter (Q3), AMC recorded $193.7 million in EBITDA, compared to $12.9 million a year ago.



Wall Street's projection suggests that AMC will return to reporting revenue at pre-pandemic levels in 2025. On a positive note, the company has shown progress in its financial performance, and its cash position has improved significantly. However, AMC still faces challenges in maintaining its liquidity and reducing its debt. The company must continue to implement strategies that address these issues while balancing the needs of shareholders and the broader market.

In conclusion, AMC's recent equity raise has helped the company strengthen its financial position and navigate industry challenges. Despite criticism from shareholders, CEO Adam Aron maintains that the move was necessary and has emphasized the importance of robust cash reserves in ensuring the company's future success. As AMC continues to face challenges in the industry, it must remain focused on implementing strategies that address its financial needs while balancing the interests of shareholders and the broader market.