(Reuters) – Buyout firm Silver Lake announced Friday that it sold its stake in AMC Entertainment Holdings for $ 713 million this week, benefiting from a 10-fold increase in the price of the stock as traders organized on social media platforms like Reddit. them up.
The transaction puts Silver Lake and its fellow investors in the black after a $ 600 million investment in convertible bonds made by the private equity firm in AMC in 2018. Such an outcome seemed unlikely when AMC, the world’s largest movie theater chain, went bankrupt last summer, a move it avoided thanks to a debt restructuring deal with Silver Lake and its creditors.
Silver Lake was able to convert the bonds to stocks thanks to the rally that pushed AMC’s stock above the bond conversion price this week.
AMC shares were down 70% in 2020 to end the year at $ 2.12, as many of the company’s movie theaters closed or operated at reduced capacity during the COVID-19 pandemic.
But the stock stopped trading at $ 19.90 on Wednesday as traders targeted strongly short-short stocks like AMC and GameStop Corp. Silver Lake sold its stake in several open market transactions that day, according to regulatory documents.
The sale makes Silver Lake the latest investment firm to take advantage of this week’s unprecedented surge in shorted stocks. The Ontario Teachers’ Pension Plan this week sold $ 497.4 million worth of stock in Macerich Co, which owns a US mall, the registrations showed.
AMC itself also benefited from the rally. It raised $ 304.8 million this week by selling stock. It is considering new measures to raise capital through stock sales, sources told Reuters on Thursday.
Reporting by Joshua Franklin in Miami; Editing by Leslie Adler