Let's go over the recent AMC slash Ape developments: Form 8K It was filed on the 25th a few days ago just before the weekend and here's what you need to know. All right. AMC preferred Equity units is constituting a depository share of 1 100th. We know that Ape is a spin-off of the preferred Equity shares.

One preferred share was made into a hundred units and that's what Ape is and AMC Preferred Equity unit. That's what they tell us Ape is indicative of. So on January 25th, 2023 AMC entered into an amendment to the credit agreement. The 12th Amendment extends the fixed date of the termination of the Covenant suspension period for one additional year to March 31st 2024.

That's good. Basically, they're just getting a more favorable debt interest payment situation. The 12th Amendment was to the credit agreement dated April 30th 2013 with the lenders from time to time party there of William in so it's Wilmington Savings fund Society We don't have to get into like all of the specifics of this, but what you need to know in their current debt and debt payment situation: They Kick the Can down the road a little bit more and this is positive that that is very fairly. Uh, just a good business move is to get more of a favorable debt situation.

It looks like they did it with a bank slash lender that's they've been with. Seems like over actually a decade. Pretty favorable. So um, the Tldr on this.

Feel free to check this out. You can search this 8K it is on their website if you want to read more into it. Uh, not the biggest breaking news, but I would say it is a bit more positive. more of the news of that people are talking about.

So a Schedule 14a and where is the exact date on this? this is the preliminary proxy statement which is important for the upcoming vote. Uh, so what we need to dive into is all this because it is, probably uh, pretty important. So if you are a stockholder uh of AMC there's a special meeting to be held on March March 14th at 11 A.M So once again, March 14th, 11 A.M Central Time So if you're on the East Coast if you're just dealing with the stock market, I believe that will be around noon o'clock So during the lunch hour, the purpose of the special meeting is to vote on amendments to the company's Uh certificate of incorporation That, together if approved, will enable companies AMC preferred Equity Unit Apes to convert into shares of AMC So basically with the preferred stock, they use that and they created Ape And now they're saying hey, can we push Ape back into AMC So there's a singular ticker representing the company instead of two as a result of an increase the number of authorized shares of common Sock and a reverse split of our common stock. So basically there's going to be a lot more stock.

but also this will simultaneously happen with a reverse split. Which as you're about to see is on a basis of ten to one. So yep, big merger and I Know this gets a little bit funky because I'm sometimes maybe you're thinking about it in your Share account, but think about what it really is in terms of value of the company. So right now AMC as a company is split between AMC and Ape, what they're attempting to do here is basically say hey, since they both represent the same legal and financial claim to the company, let's just merge it back together as one.

Which another way, if you're a little bit more pessimistic, you can interpret that to really mean basically Ape was kind of a failure in what it was meant to do. So back in August of 2022, it made its debut and obviously the legal and financial claim to the company that is AMC was split between AMC and Ape and ever since then, uh, they've never traded at a parody. That's interesting because as I just mentioned, they have the same legal and financial claim to the company so you would expect them to trade at very close prices and right now they're off by about 275 which is a very widespread and we'll talk about this in a little bit. but that Delta that difference is right now.

What's prompting Ape to go up in AMC to come down? Because people are viewing it as an Arbitrage opportunity. Personally, I am not playing the Arbitrage opportunity. but I find it interesting to discuss and I have to admit the people who are playing it, it is a smart move. Obviously it's not without risk it could blow up in their face.

But I understand why they're arbitraging it because they're basically saying hey, based on this SEC filing, we think the vote's going to go through if the vote goes through. That basically says AMC and Ape should be trading at the same price. So obviously they're trying to play the differential between the two prices to rewind back to August This was created with preferred stock and they had 50 million of those. so they basically turned one preferred stock into a hundred.

Apes So it ended up being 5 billion. At one point in time, there was just one billion. They were all authorized because the preferred stock Circa 2013 did not need any of the approval of shareholders. So that's kind of where we were at with it.

and what the real really asking in here what you're about to realize is when they put Ape back into AMC the same control that they have over Ape is what they're looking to have over AMC So what I mean by that is. Prior to this, they had to get shareholder approval for more share authorization for dilution. They had to come to shareholders for the approval. That wasn't necessarily true with the preferred stock which they transported in Ape.

And as you're about to read in this that power that they're looking for where basically they can do what they feel is necessary without shareholder approval, they want to be able to do that with AMC What does that add up to? It adds up to the fact that they want to be able to use these authorized shares and dilute without shareholder approval. in terms of AMC something they can already do in terms of Ape, they're looking to kind of merge that capability the proposals. The company is holding a special meaning for the following purposes as more fully described in the accompanying proxy statement: Proposal Number One: To approve an amendment to our third, amended and restated Certificate of Incorporation to increase the total number of authorized shares of common stock from 524 000 uh to 550 000 shares of common stock. So they are just asking for more authorization Before you could dilute, you first have to get the shares authorized.

That's a normal process to approve an amendment to our certificate of Incorporation to effectuate a reverse stock split at a ratio of one share of common stock for every 10 shares of common stock, which together with the share increased proposal, shall permit the full conversion of all outstanding shares of Series A preferred stock into shares of common stock and collectively with the authorized share increased proposal. So I'm going to read Number three, but you're going to realize that all these they're all happening together or they're all not. That's how this is going to be currently set up. Either you get all three or you're getting none.

That's how the vote is held. It's not like you could have like one in three or one and two, but not the other. They're either all going or they're not. So proposal number three to improve one or more adjournments of the special meaning if necessary to permit further solicitation of proxies if there are not sufficient votes for the time of the special meeting to approve and adopt the charter Amendment Proposals that's nothing special, that's just more legal Bumbo Jumbo that they're looking for they need Quorum they need a majority vote for to be able to do any of this.

So what they're really going for is one and two are the key ones and what they're needing is to merge ape into AMC First they have to get authorization for more shares and then they're gonna merge it and also simultaneously. That's going to happen with a one for ten reverse stock split. Usually stock splits, you end up with more shares at less of a price. but really, your financial investments the same.

In this scenario, you end up with less shares at a higher price. Once again, your financial investment is the same. In a normal stock split scenario, it's equivalent to having a ten dollar bill and let's say it's a 10 for one normal stock split You now have 10 one dollar bills. so you have more bills.

I.E more shares. but you still have ten dollars. In this scenario, it's a reverse stock split. So it's like having ten one dollar bills.

and now you have one ten dollar bill. You have less shares I.E less bills. But you still have ten dollars you shouldn't be focusing hardcore on like what's my share? My Share account. You should look at it as like a total pile of money.

Here is my entire pile of money that might be represented by either more or less shares, obviously multiplied out by the price. But look, if your pile of money is gaining value or losing value, that's the major thing that matters here. I See some confusion with stock splits. reverse stock splits.

In all reality, it's just like a mathematical sleight of hand. It's more of like a kind of an accounting pain in the ass. But if you looked it up on whatever website you trust or whatever AI system you're searching or whatever, stock splits and reverse stock splits do not create or destroy value. the market cap of the company.

Theoretically Remains The Same Now I'm saying theoretically because there are other things to consider. It does have an impact on the affordability or potential not affordability of options. Sometimes there's other changes in the background. There is a psychological thing.

For example, when you go through a normal stock split all of a sudden if people are looking at whatever stock XYZ trading at 100 and then they do a 10 for One reverse split, which once again, there's no value created or destroyed. Psychologically, it seems cheaper at a hundred, or in the reverse if it goes from 10 down to 100 or 100 up to 10. psychologically. even though it's a 10 for one in the first case, a stock split.

the other case, a reverse stock split. No values being created or destroyed. but it seems psychologically cheaper in the first case and more expensive in the second case. So there are psychological implications without a doubt.

And also, it's worthwhile to note that that from a market standpoint, there could be implication in the options Market Because there's some funky things that can go on with premium so we can get into, uh, some of the details. Obviously, if you listen to them, they very much want you to vote Yes on each of these I Want to make something clear? I Believe everyone should come up with their own thoughts and opinions. My goal in covering this and making this a video is just explaining it. Hopefully I can boil things down to their layman terms so you can understand it a little bit more.

You need to vote in the way that you think is appropriate. It's up to you. it is 100 up to you. It's your money on the line I Know which way I'm gonna vote and I'm gonna vote in the way that I think is best for my investment in the company.

You should vote the way that you think is the best investment for your money in the company. But anyway, Proposal one: They need more approved shares because of the putting eight back into it. Obviously you have to increase the Share account and then from there they don't want to have like that many shares. so they're going to end up doing a 10 for One reverse split.

Now a lot of the times they do with reverse stock split. a lot of the times you see this on the NASDAQ exchange where company Falls below really outside the parameters of what you need to have to be listed and one of those parameters on the NASDAQ And please understand the New York Stock Exchange is different. That's the Nyic. It's a different exchange but on the NASDAQ it becomes really complicated.

If you fall below a dollar, there's a chance you could get delisted. So a lot of the times reverse stock splits leave a negative taste in your mouth because the company is going down down, down and they've fallen so far that they might get delisted. So they do a reverse stock split. So even though the market value of the company stays the same, the price goes back up so they can stay listed on the NASDAQ.

So if you were to look at it just historically, across all reverse dot splits, it's not a good situation. This one's a little bit different though. They're not doing a reverse stock split to avoid getting delisted, they're doing it to get it the mass amount of shares kind of under control after merging a back into AMC. In this, like the Re I mean you could read it right here: A reverse stock split of the common stock at a ratio of one share of common stock for every 10 shares of common stock.

So they want to put everything into common stock and then it would be a 10 for One reverse split. So basically how many ever shares you own, you would divide that by 10 or multiply it by 0.1 So if you have a thousand shares, you would now only have a hundred. But it doesn't end there because theoretically the price would also 10x. So once again, back to what I was saying about that pile of money.

Your pile of money is still the same. It's just you have less amount of bills I.E less shares at a higher value? That's it. So it's a mathematical sleight of hand, but the end result is in a theoretical sense the same. I Can't call it out in reality because it hasn't happened.

We're going to find out really how the market thinks of this. Your vote is important regardless of the number of shares that comes sock and or series A preferred stock or Apes representing such as shares of series A prefer stock that you own. So basically they're saying yes, uh, they want everyone to vote and you should vote I'm of the opinion that you should 100 vote if you want to uh I Hope that this discussion may be cleared up. some of your questions of what means what and what doesn't mean what and some of the math behind it I implore everyone before you cash your vote to read through this thoroughly.

I Think One of the biggest issues I'm seeing is that people are kind of just reading random things on something like Reddit or Twitter and then they're casting their vote and nothing about that. It's just don't stop there take in the thoughts and opinions of many people. cast a Y net but also you should take the time to go through all this like yourself. The final thing that I want to wrap this up with is right here.

in order to affect the conversion of Apes into common stock, shareholders must approve both the share increased proposal and in the reverse stock split. So one in two of the proposals It's All or Nothing type of a situation The increased proposal loan will not create sufficient authorized common stock without the reverse split proposal to enable the conversion to occur. Nor will the reverse split proposal alone satisfy the terms of the series A preferred stock to enable the conversion to occur. so you can't really have one without the other, It just wouldn't make sense.

So for this to really happen? I Guess technically I misspoke before three could happen without the other ones. But the main things that you care about, especially if you're watching this, is that one and two, they're either both happening or neither are happening. You can't have a scenario where it's just one or just two anyway. I Hope you're feeling a little bit more confident in what this all means right now.

So the first part of it is that just a better debt debt payment situation. That's awesome. And for the second one, you just have to know what's going on. Basically, they're taking all the ape which was already at a 1 to 100 ratio from the preferred stocks.

They're gonna do do that, fix that up, and then they're doing a 10 for One Reverse split. Um, if it's all approved and it sounds like the Voting is going to be in mid-march of 2023 I Would love to get your thoughts on it. Which way are you voting? Let me know in a comment below.