Blog

Suspense, mystery, intrigue — the latest AMC drama has a plot twist not even the movie theater company saw coming.

AMC Entertainment announced Tuesday it will raise $230.5 million by selling 8.5 million shares to hedge fund Mudrick Capital, saying it plans to use the cash to “go on the offense” by pursuing opportunistic acquisitions across the virus-ravaged movie-theater sector.

But just hours later, it was reported that Mudrick Capital had sold all of its shares, saying the stock was “overvalued,” and pocketing a tidy profit in the process. The second headline didn’t tank AMC’s shares, however. They closed up 23 percent, higher than the 15-percent boost they got after the initial news.

Mudrick valued AMC stock at $27.12 a share, giving the company a valuation upwards of $13 billion — a remarkable number for a stock that had dropped to $4 six months ago as its business was on the brink of bankruptcy amid nationwide COVID-19 lockdowns.

AMC is reportedly looking to make acquisitions as movie lovers return to theaters.AFP via Getty Images

“I’ve never seen anything like this,” LightShed Partners analyst Rich Greenfield told The Post. “Good news is positive for the stock; bad news is even better.” Greenfield has given AMC shares a one penny price target, predicting the company will never generate cash again.

A person close to Mudrick said the hedge fund never intended to hold the shares long-term but had not informed AMC they would sell their stake so quickly. Mudrick Capital, which specializes in distressed debt, has almost $200 million in outstanding loans to AMC and a vested interest in the movie theater exhibitor paying down doubt.  

One person close to Mudrick says, “Whether Mudrick holds the shares or sell is irrelevant — AMC raised $250 million dollars today, which will help as they pay down almost $6 billion in debt.”

The source added that investors at the hedge fund want the best for the company but are cynical the Reddit rally can be sustained. Most of Mudrick’s investors come from a different world than Redditors — “one that values business based on fundamentals,” a source adds.

AMC’s shares have gotten a boost from the meme stock phenomenon.Evan Agostini/Invision/AP

While the company has struggled through the pandemic, its shares have gotten a massive boost from day traders who have organized on Reddit to push so-called meme stocks including AMC, Gamestop and BlackBerry higher. AMC stock is now up more than 1,000 percent year to date.

And even as the Reddit army has buoyed the price over the last few months, sources note that day traders aren’t as reliable as institutional investors and could decide to sell as quickly as they decided to buy into the company.

In a Tuesday securities filing, AMC admitted that its current market capitalization “reflects valuations that diverge significantly from those seen prior” and that “purchasers of our Class A common stock could incur substantial losses if there are declines … driven by a return to earlier valuations.”

AMC declined comment. Mudrick declined comment.

A new ride-sharing app that advertised lower prices than Uber and Lyft launched in New York City over the weekend — but was forced to raise fares after admitting Tuesday that it was not charging some riders sales tax.

Co-op Ride, which has billed itself as an ethical alternative to Uber and Lyft, said that offering lower fares to some users by not charging sales tax was an honest mistake. The snafu comes days after the group received a favorable write-up in the New York Times on Friday. 

“We are looking into this and have contacted the tech provider,” co-founder Ken Lewis told the Post, adding that the co-op would pay any missed sales tax out-of-pocket rather than hitting riders with surprise charges.  “We will investigate.” 

On Tuesday afternoon, Co-op Ride offered a Post reporter using an iPhone a $29.14 ride from the Metropolitan Museum of Art to City Hall. The fare included a $0.77 black car fund charge and a $2.75 congestion fee — but not the required 8.875-percent local and state sales tax. With the taxes included, the ride would have come out to about $31.72. 

Co-op Ride says it will allow drivers to work for it as well as Uber and Lyft.Education Images/Universal Image

Nevertheless, Uber and Lyft asked $42.78 and $40.97 respectively, including tax, for the same ride — meaning that Co-op Ride still would have been the cheaper option.

The Co-op Ride app was created by New Jersey-based software firm Limosys, although Lewis told the Post that the co-op is also developing its own software with volunteers from Facebook, Google and other technology companies. 

The app is run by a group called the Drivers Cooperative that was founded by Lewis, who is a a former black-car driver, as well as former Uber East Africa operations manager Alissa Orlando and self-proclaimed “social(ist) entrepreneur” Erik Forman. 

The group says it takes a smaller chunk of fares than Uber or Lyft, resulting in higher pay for drivers and lower fares for riders. And while Co-op ride wants to take market share away from Uber and Lyft, its drivers are allowed to drive for any ride-sharing service. 

Despite the tax issue, Co-op Ride says it can offer lower prices than Uber or Lyft.Getty Images

Lewis said that he was inspired to create the ride-share service, which currently has about 2,500 drivers, after thousands of Uber drivers were left without work during the pandemic and had difficulty collecting unemployment benefits. 

“Uber and Lyft and the ride-share space has been really hard on drivers,” said Lewis. “Our model is one that will be driver-centered and we expect that to bring benefits.”

Co-op Ride did not charge sales tax in several other routes tested by the Post. 

At around 3:30 p.m. on Tuesday, Co-op Ride offered a $51.15 ride from Times Square to JFK Airport, which would have come out to $55.69 with sales tax included — far less than the $96.83 and $124.99 requested by Uber and Lyft respectively. 

Co-op Ride’s launch comes as wages for Uber drivers have surged. Uber spokesman Harry Hartfield recently told the Post that the median New York Uber driver is currently making $38 per hour as a shortage of drivers has driven up wages.

Hartfield declined to comment about Co-op Ride. Lyft did not immediately reply to a request for comment.

Amazon warehouse workers and delivery drivers are injured far more often on the job than employees of competitors like Walmart and UPS, according to a new study.

In 2020, 5.9 out of every 100 Amazon warehouse workers were victims of “serious injuries” that required them to either miss work or be placed on light duty. By comparison, that figure was 2.6 for Amazon competitor Walmart and 4.0 for warehouse workers overall, according to the report by the Strategic Organizing Center.

In total, workers at the Jeff Bezos-run company logged more than 27,000 injuries last year, according to the report, which used OSHA data.

“Amazon’s obsession with speed has come at a huge cost to its workers,” wrote the Strategic Organizing Center, which is a coalition of large labor unions including the Service Employees International Union and the International Brotherhood of Teamsters. “It’s time to hold Amazon accountable for the dangerous working conditions it has created and continues to ignore.”

Amazon workers have spoken up about workplace injury rates for years. In 2019, over a hundred Staten Island Amazon warehouse workers protested the company’s workplace conditions, accusing Amazon of treating workplace safety as a “secondary concern.” Injury rates were also a key issue for organizers of the failed 2021 union drive at an Amazon warehouse in Bessemer, Alabama.

And it’s not just Amazon’s warehouse workers who are injured abnormally frequently. Last year, 9.7 out of every 100 “last mile” delivery drivers for Amazon were seriously injured on the job, compared to 6.5 out of 100 for similar workers at logistics competitor UPS. 

Under tight deadlines and quotas, some Amazon delivery drivers have taken to urinating in bottles inside their vehicles. 

Workers at the Jeff Bezos-run company logged more than 27,000 injuries last year.REUTERS

Amazon spokesperson Kelly Nantel did not dispute the report’s conclusions but said that the company was taking steps to reduce worker injuries. 

“While any incident is one too many, we are continuously learning and seeing improvements through ergonomics programs, guided exercises at employees’ workstations, mechanical assistance equipment, workstation setup and design, and forklift telematics and guardrails,” she told the Post. 

The report comes after Amazon reported a record $8.1 billion profit during the first three months of 2021, buoyed by online shopping during the pandemic. 

Also on Tuesday, the Jeff Bezos-owned Washington Post published a separate analysis of Amazon OSHA reports, also finding a rate of 5.9 serious injuries per 100 warehouse workers. 

The report comes after Amazon reported a record $8.1 billion profit during the first three months of 2021. AFP via Getty Images

New York Attorney General Letitia James on Tuesday asked a state court to order Eastman Kodak and its CEO James Continenza to provide evidence and testimony in advance of a planned insider-trading lawsuit against them.

The company and Continenza both violated New York securities law when he bought 46,737 shares of the company’s stock on June 23, James’ office alleged in court filings.

The company warned investors last month that James had threatened to sue over the matter. 

Continenza’s stock purchases came about a month before Kodak and the Trump administration announced a deal that gave the ailing camera company a shot at a $765 million loan under the Defense Production Act to support the production of drug ingredients critical to fighting the COVID-19 pandemic.

The announcement sent shares of the company soaring from just over $2 per share to a peak of $60, which raised eyebrows about Continenza’s stock purchase at an average price of $2.22 per share a month earlier. Ultimately, the feds halted the deal as regulators looked into suspicious trading activity.

James on Tuesday asked a court to order Continenza and Kodak General Counsel Roger Byrd to publicly testify and provide documents related to Continenza’s June trade.

“Corporate greed will never go unchecked in New York,” James said in a statement. “As millions of New Yorkers and Americans across this nation lost their jobs and were waiting for unemployment checks, Kodak’s CEO was using insider information to illegally trade company stock.”

James alleged that the purchase was in violation of the company’s inside-trading policy. She said Continenza did not seek nor receive written pre-clearance to make the purchase, despite the company’s claims that it was in line with protocol. 

James also said that Kodak, its chief accounting officer, Continenza and CFO David Bullwinkle made “false and misleading” statements to investors when it said in its quarterly earnings report that Continenza’s June stock purchase was “in compliance with the Company’s insider trading policy.”

“Kodak even double downed on this fraud by relaying false information to investors before the company’s annual meeting that took place last month,” James added. “We are asking the court to order Mr. Continenza to testify in open court, so the facts can be exposed before the American people. My office will use every tool at its disposal to hold those who violated the law accountable.”

Ellen Davis, an outside spokeswoman for Kodak, noted that the company retained the DC law firm Akin Gump Strauss Hauer & Feld last year to conduct an internal review, which found that Continenza’s transactions did not violate company policy or securities laws.

“Importantly, Mr. Continenza has purchased Kodak stock in virtually every open window period – and has never sold a single share,” Davis said.

She added that before Tuesday, Kodak “repeatedly offered to make witnesses available and the Attorney General repeatedly declined.” 

“It is telling that she has now chosen to publicly seek this order asking for the very testimony in which she previously had no interest,” Davis said. “In addition to being wrong on the facts, the Attorney General’s novel and highly problematic legal theory that seeks to impose liability in the absence of intent would have a chilling effect on directors and executives of every public company, who could never invest in their own companies without fear of having good-faith decisions, pre-approved by counsel, second-guessed by regulators and charged as insider trading.

“We are confident that the facts and the law are on our side and are prepared to present our case in court if there becomes a need to do so.”

Investment firm Engine No. 1, which last week won at least two seats on Exxon Mobil Corp’s board, is planning to launch an exchange-traded fund that will focus on socially conscious investing, according to a regulatory filing.

The portfolio will be called the Engine No. 1 Transform 500 ETF and will invest in the consumer, energy, financial services, healthcare, technologies and utilities sectors, among others, according to a May 28 regulatory filing.

It “seeks to encourage transformational change at the public companies within its portfolio through the application of proxy voting guidelines,” the filing said.

There are no details in the filing on the fees the fund plans to charge, how much money it may try to raise or when the Securities and Exchange Commission may make a decision on approving the planned new offering.

Engine No. 1 recently won two seats on Exxon’s board.SOPA Images/LightRocket via Gett

Engine No. 1 was founded late last year with roughly $250 million in assets and made an enormous splash when it announced a $40 million investment in Exxon and plans to force the oil giant to improve its financial performance and focus more on clean energy by adding new directors to the board.

Last week, Exxon shareholders elected at least two of Engine No. 1’s nominees, with the counting not yet complete.

All along, investors expected Engine No. 1 soon to try to raise fresh cash from institutional and retail clients.

A May 28 filing confirmed that Engine No. 1 plans to launch its Transform 500 ETF.AFP via Getty Images

Planning for the ETF was set in motion long before last week’s win, according to previous regulatory filings.

The new portfolio will be managed by Molly Landes, who joined Engine No. 1 in March after having worked for BlackRock Inc, the world’s biggest asset manager, since 2011, the filing says.

Investors have plowed trillions into exchange traded funds over the last decade, according to Morningstar, attracted by their lower costs.

Engine No. 1’s planned ETF was first reported by Bloomberg.