Durwoods move forward on AMC stock offering

Sale likely to raise at least $50 mil

AMC Entertainment Inc. chairman Stan Durwood and his children have begun efforts to sell at least 3.3 million shares in the exhib, about one quarter of the family’s total holding, in a public offering likely to raise at least $50 million.

The offering comes at a bad time, however. AMC’s stock price has plunged 40% since the start of the year to its lowest point in several months, closing Wednesday down 50¢ to $16.87.

If the stock price does not recover before the offering, Durwood will have to compensate his children for the low level of the stock, according to a family agreement outlined in SEC filings last year.

AMC said earlier this week it had filed documents for the long-awaited offering just before the long weekend. The family had agreed to sell the stock as part of a settlement of a shareholder lawsuit in 1996, which also required the offering to be completed by August of this year.

The sale also followed a restructuring of the Durwood family companies to distribute much of the family’s stake in AMC directly to Durwood’s six children, “to resolve a dispute among the Durwood family members concerning the value of their interests” in the family holding companies.

That distribution left Durwood holding 5 million supervoting shares in AMC while the children were each given 1.4 million common shares. The total common stock held by the children accounted for 68% of common stock outstanding, while Durwood owned the only supervoting stock, thereby ensuring control of AMC.

Stock slide threatens sales

AMC’s stock price slide threatens to create some problems for the offering. A family agreement on the offering says that if the stock is sold at less than $18 a share, Durwood will cover the difference up to a maximum payment of $20 million. More importantly, he will make the payment in stock, which means his own position will likely be diluted even further.

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