Business: AMC, from theaters to gold mining

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AMC Entertainment Holdings Inc., the operator of movie theaters and a meme stock, recently announced that it was buying 22% of a small gold miner called Hycroft Mining Holding Corp. Weird stuff! I have discussed that the way to understand the deal might be that AMC is in the business of raising money as a meme stock and, now, helping other companies raise money as meme stocks:

AMC’s core competency … is using the meme-stock mechanism to raise money, and now it is in the business of selling that expertise to other companies. AMC is an investment bank, or really a merchant bank that helps small companies do meme-driven at-the-market offerings and takes equity for its fee. 

AMC Theatres Reports 900K Subscribers and Revenue of $1.5B in Q2 -  Subscription Insider

Here are Bloomberg News and Wall Street Journal stories about how the deal came together that sort of confirm that model. Jason Mudrick, the hedge fund manager who “was an architect of AMC’s narrow escape from bankruptcy last year” and who bought a bunch of AMC shares last year to sell into retail enthusiasm, is also a big holder of Hycroft stock (and took Hycroft public through his special purpose acquisition company). So:

Jason Mudrick, a hedge-fund manager and one of Hycroft’s top investors, saw an opportunity for the company to raise much-needed funding, people familiar with the matter said. It was down to just $8 million in cash. …

Mr. Mudrick called [AMC Chief Executive Officer Adam] Aron last week and asked if he could offer Hycroft CEO Diane Garrett advice on how to tap equity funding through the type of at-the-market share offering that AMC had successfully used, people familiar with the matter said. …

After Mr. Mudrick asked for advice on a Hycroft stock offering, Mr. Aron became intrigued and said that AMC was interested in investing in Hycroft itself, people familiar with the matter said. Mr. Aron had never heard of Hycroft before Mr. Mudrick called him.

I suppose if you were starting a chain of movie theaters you might call Adam Aron for advice, but he might not give it to you for competitive reasons, and anyway it’s not like he’s had a perfect record of running movie theaters profitably in recent years. But if you were launching an at-the-market offering into a rising market for your stock driven by retail enthusiasm, you would absolutely call Adam Aron for advice; he has been remarkably successful at that. It makes sense that he would want to share his wisdom, but also get a cut of the upside.


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