AMC Entertainment seeks to become public company with IPO
08/30/2013 9:43 AM
08/30/2013 8:25 PM
AMC Entertainment Holdings Inc., the movie theater operator owned by China’s richest man, on Friday unveiled plans for an initial public stock offering valued at $400 million.
The Leawood-based cinema chain, which has 400 employees at its headquarters in the Park Place development, may use proceeds to fuel expansion and repay debt, a regulatory filing said. The company has applied to list shares on the New York Stock Exchange under the symbol AMC.
This would be at least the third IPO attempt by AMC Entertainment, which was bought by Wang Jianlin’s Dalian Wanda group last year. It owned, operated or held interests in 343 theaters as of June 30.
The company may be looking to take advantage of strong U.S. ticket sales, according to Eric Wold, an analyst with B. Riley Co. in San Francisco.
“We’re coming to the end of a record-breaking summer box office,” Wold said. “The timing looks smart.”
Theater owners are making acquisitions to gain leverage over film studios when negotiating revenue splits, said Brett Harriss, an analyst with Gabelli Co. in Rye, N.Y. Publicly traded stock might make it easier for AMC to do deals, he said.
“We’re seeing a consolidation pickup,” Harriss said. “Being a public company could help.”
AMC didn’t specify the number of shares being offered or the price. The company canceled its most recent IPO effort in September 2012 when Dalian Wanda, China’s largest entertainment company, agreed to buy the exhibitor for $2.6 billion, including debt.
The deal made Wanda, with its holdings in China, the world’s biggest cinema owner. AMC didn’t say in the filing how much of the company Wanda will own after the initial public offering is completed.
A previous AMC Entertainment offering was scrapped in 2008 after revenue fell and losses widened.
Summer movie ticket revenue will reach $4.7 billion after this weekend’s Labor Day holiday, which marks the end of the season, estimates researcher Hollywood.com. That’s about 10 percent more than last year and 7 percent higher than the previous record in 2011.
AMC’s revenue increased 2.6 percent to $1.34 billion in the six months through June 30 from a year earlier, while profit from continuing operations more than doubled to $41.1 million, filings show. The company had about $2.1 billion of long-term debt at June 30.
While AMC Entertainment is a great brand, some of its theaters are too large, with 25 to 28 screens, said Matthew Harrigan, an analyst with Wunderlich Securities in Denver. The cost of running complexes that size makes it hard to match the profit margins of some competitors.
“The sweet spot is 15 to 18,” Harrigan said. “I’ll be interested in seeing what progress they’ve made in reducing costs.”
The company is renovating some of its theaters to improve the guest experience, replacing finishes, improving the sound quality and adding plush, reclining seats operated electronically. Those locations have shown an 84 percent increase in attendance, according to the filing.
Wang, who is Wanda’s chairman, is China’s richest man, with a net worth of $13.8 billion.Bloomberg News contributed to this report.
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