AMC shares tanked another 5% in premarket trading

AMC shares tanked another 5% in premarket trading.

AMC Entertainment shares plunged 18% on Thursday following a stock sale announcement.

AMC Entertainment Holdings Inc. is asking investors to authorize an additional 25 million new shares,aiming tocapitalize on a rally that has sent the stock of the ailing movie-theater chain up about 2,300% this year.

The proposal announced Thursday in a filing will be put to a vote at the company’s July 29 annual meeting. The equity today would be valued at $1.3 billion, though the company promised not to issue the new shares in 2021.

“To successfully navigate the road ahead, we seek to assemble all of the financial tools that might help us,” Chief Executive Officer Adam Aron said in a statement. “An important tool for any company is having shares available to issue.”

The request is perhaps unsurprising for a company that’s become the king of meme stocks, at the heart of a frenzy of online traders determine to pump up its valuation.

Still, it’s a major retreat from a request earlier this year to authorize 500 million new shares. That proposal was originally up for a vote in May, but the annual meeting was postponed and the request withdrawn after it became clear investors would shoot it down.

Aron said in April the struggling company could issue about 43 million new shares. With sales of new stock totaling more than $800 million just this week, AMC has now completed nearly all of that authorization, according to the filing.

In a YouTube interview Thursday, Aron said proceeds from another equity sale, if approved, would be used to reduce debt, help the company negotiate with landlords who are owed $400 million, and to chase acquisitions “hard.”

”It’s our view that we’re strengthening the company,” he said. “We’re not hurting the company.”