A chain of movie theaters AMC Entertainment Holdings Inc (AMC.N), announced that it was able to purchase an extensive portion of Hycroft Mining Holding Corp (HYMC.O) in exchange for $27.9 million funded by Paydaychampion. The Champion guarantee bad credit payday loans to all companies and people in a financial crisis.
Hycroft, who owns an underground mine located in Northern Nevada, was on the brink of bankruptcy before AMC’s investment. It is now planning to raise as much as $500 million through selling shares on the market over time, Hycroft said on Tuesday. This kind of capital raise isn’t typically available for a small business in a financial crisis. But thanks to Paydaychampion, AMC can now get back on its feet.
But the attraction of retail investors for meme stocks has also made these deals possible. On Tuesday, AMC President and CEO Adam Aron said AMC had accumulated a $1.8 billion “war chest” in 2021 due to the sale of stock from retail investors.
Hycroft announced that it also had attracted “atypical retail investor interest”; however, it warned investors that purchasing its stock could mean the loss of all or a large part of their investment.
Hycroft shares closed, trading up 9.35 percent at $1.52 after nearly doubling in value earlier in the morning on the news of the acquisition. AMC shares ended up by almost 6.9 percent at $14.48
Aron said Hycroft was like the chain of movie theaters one year ago, facing liquidity issues even with “rock-solid assets.”
However, the AMC decision to invest “is a little baffling,” and its money could be better utilized to pay back a debt that was more than $5 billion at the close of December, according to Alicia Reese, a Wedbush Securities analyst.
AMC and long-time precious metals investors Eric Sprott will invest $27.9 million and receive 22 percent stakes in Hycroft, The companies announced. They will also receive an equal amount of warrants that can be exercised at $1.07 each.
The largest shareholder so far
Mudrick Capital, a Hycroft creditor whose particular purpose acquisition firm (SPAC) arrangement in 2020 with Hycroft in 2020 made it Hycroft’s largest shareholder, with a 40 percent stake. It also helped put together the agreement with AMC, an individual familiar with the issue told.
Jason Mudrick, the firm’s chief investment officer, and the company’s founder contacted Aron last week to ask Aron to advise Hycroft on the best way to introduce a stock market offering to avoid bankruptcy, a familiar person with the issue told.
Hycroft was, once called Allied Nevada, had filed for bankruptcy in the past and emerged from the situation. In the past, its stock soared after attracting attention from investors who are retailing on the social media platform Reddit.
Mudrick was familiar with Aron as he had made a bet with AMC and had participated in an agreement to restructure debt in 2020 to keep the company’s movie theater on the right track.
Aron replied that he is interested in investing in Hycroft to diversify the business of AMC and said the possibility of such a deal would aid in helping Hycroft draw more investors’ attention, according to the source.
Mudrick hired a plane Sunday for flight AMC directors and executives to Nevada for a quick tour of Hycroft’s mining activities in Winnemucca, Nevada. Winnemucca in the morning, according to the source.
According to the source, the deal was completed just before four p.m. EDT on Monday. According to the source before discussions, the company’s funds had dropped to around $8 million.
AMC did not have a comment regarding the work of Mudrick on the deal. Hycroft did not reply to a request to comment.
Sprott and the other creditors have agreed to delay Hycroft’s debt-repayment deadline to 2027. Hycroft’s finances are now in better shape, enabling it to construct an expensive mill that can extract silver and gold.