Movie theater chain AMC Entertainment has agreed to purchase a major stake in a Nevada metal miner, the companies announced Tuesday, an unusual expansion for the one-time meme stock.
AMC will spend $27.9 million in cash for the deal, receiving roughly 23.4 million shares for the company, Hycroft Mining Holding Corp., and an equal amount of stock warrants. The deal would make AMC the owner of roughly 22% of Hycroft.
AMC CEO Adam Aron said in a release: “The strength of SPIDER-MAN: NO WAY HOME and THE BATMAN, as well as 2022’s promising industry box office, heighten AMC Entertainment’s conviction that we are on a glide path to recovery. Our strategic investment being announced today is the result of our having identified a company in an unrelated industry that appears to be just like AMC of a year ago. It, too, has rock-solid assets, but for a variety of reasons, it has been facing a severe and immediate liquidity issue. Its share price has been knocked low as a result. We are confident that our involvement can greatly help it to surmount its challenges — to its benefit, and to ours.”
Hycroft shares jumped nearly 90% in premarket trading to $2.64. AMC shares, which are down 50% this year alone, gained 3% in premarket trading.
In addition to AMC, the same number of shares and warrants is being purchased by metals investor Eric Sprott. Hycroft said in its release that investment vehicle Sprott Private Resource Lending II has agreed to extend to change the maturity of its debt to May 2027 from May 2025.
AMC’s stock emerged as one of the main “meme stocks” last year, surging as an army of retail investors bought into shares of companies that were heavily shorted by hedge funds. Aron has embraced the new shareholders, including offering popcorn deals for owners of the company.
The company has also used its newfound popularity to raise billions in additional capital, with Aron saying some of that money would be used for strategic acquisitions.
The CEO has also sold tens of millions of dollars of his own shares in AMC, which he has attributed to estate planning.
