(Reuters) – Buying firm Silver Lake reported on Friday that it sold its stake in AMC Entertainment Holdings for $ 713 million this week, capitalizing on a ten-fold rise in stock prices as traders organized into Social networking platforms like Reddit them up.
The trade puts Silver Lake and its co-investors in the black after a $ 600 million investment in convertible bonds the private equity firm made to AMC in 2018. That result seemed unlikely when AMC, the largest film chain of the world, struggled to avoid bankruptcy last summer, a move it avoided thanks to a debt restructuring deal with Silver Lake and its creditors.
Silver Lake was able to turn the bonds into shares thanks to the concentration that drove AMC shares above the conversion price of the bonds this week.
Shares of AMC had dropped 70 percent in 2020 to close 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 ended up trading at $ 19.90 on Wednesday as traders headed for sharply short stocks like AMC and GameStop Corp. Silver Lake sold its stake in several open market transactions that day, according to regulatory statements.
The sale makes Silver Lake the latest investment company to pick up this week’s unprecedented rise in short stocks. The Ontario Teachers ’Pension Plan this week sold a $ 497.4 million value it owned to U.S. mall owner Macerich Co., according to regulatory filings.
The AMC itself also took advantage of the concentration. This week it raised $ 304.8 million selling shares. It is considering new moves to raise capital by selling shares, sources told Reuters on Thursday.
Report by Joshua Franklin in Miami; Edited by Leslie Adler