AMC Entertainment has completed a 10:1 reverse stock split — which consolidates the number of existing shares held by investors into fewer shares — ahead of a planned conversion of preferred equity units, or “APE” stock, into common shares on Friday.

The reverse split, executed Thursday, reduced the number of AMC shares by giving investors one share for every 10 they previously held, while boosting their price as the stock falls in value. Shares in the parent of AMC Theatres opened trading Thursday at $19.60 after hovering in the $2 per-share range in recent days, ahead of the reverse stock split being implemented.

The stock price then retreated in value to close down $5.18, or around 26 percent, at $14.42 on the day as Wall Street investors look ahead to the APEs-to-stock conversion. On Friday, as planned, the realignment of AMC common shares and APE units moved a step closer as the exhibitor in an SEC filing said trading in the preferred equity instruments had been suspended at the opening of financial markets, and they would be delisted from the New York Stock Exchange on Sept. 5.

Converting AMC’s APE shares after shrinking the number of shares outstanding aims to allow the exhibition giant to offer new shares for sale to strengthen its balance sheet. The APE units — a name for the corporate tool adopted by meme stock investors — earlier worked as a new security to help AMC raise fresh capital to help pay down a hefty debt load.

But that fundraising tool was followed by AMC looking to converge the APE units and common shares to stop investors buying the lower-cost APE shares and shorting the higher-cost AMC common shares as part of an arbitrage trade.

During a recent analyst call following the release of the company’s second-quarter earnings, AMC Theatres CEO Adam Aron warned retail investors against opposing the APEs-to-stock conversion plans as that risked tipping the company into bankruptcy.

“We need to be able to raise capital if we need to. The dumbest thing we could ever do as a company is run out of cash and other companies in the industry have run out of cash. And some of the armchair quarterbacks on Twitter, who give me advice every day, if I follow their suggestions, we would have run out of cash a long time ago. If I follow their suggestions now, we’ll run out of cash,” Aron argued.

On Aug. 11, a Delaware Court judge removed the last hurdles to AMC continuing to sell stock to reduce its high debt load by synchronizing the value of APEs and common shares.  

Aug. 25, 9:30 a.m. Updated to indicate trading in APE units had been suspended at the opening of financial markets on Friday.

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