Faithful investors who helped pull AMC Entertainment Holdings Inc. back from the financial brink are cheering its unorthodox investment in Hycroft Mining Holding Corp., a troubled gold and silver mining company.
The investment follows a challenging run for Hycroft, which went public in early 2020 through a merger with a special purpose acquisition company backed by hedge fund manager Jason Mudrick. It had lost around 80 per cent of its value since its debut, and the company asked its lenders to grant it some breathing room on its debt last month.
Hycroft’s largest shareholder, Mudrick Capital, has experienced this phenomenon before. Mudrick was an architect of AMC’s narrow escape from bankruptcy last year. When AMC’s shares jumped in early 2021, Mudrick encouraged the theater operator to capitalize on the rally. The company issued about US$400 million worth of new shares and used the proceeds to pay down debt.
This time around, Mudrick’s role was more involved.
After rushing AMC management to a remote Nevada location to visit the mine before finalizing the decision, Mudrick, AMC’s Chief Executive Officer Adam Aron and a handful of lawyers hashed out the details via Zoom.
From the jump, time was short. Hycroft had only six days to put together its deal in order to preserve a low price for AMC’s stock purchases; Nasdaq requirements meant they would price at the average of the past several days of trading, and delay would include post-rally prices in that average.
Representatives from Mudrick Capital, AMC, and Hycroft did not provide comment.
Reddit investors started talking about Hycroft and drove its stock up to a high of US$1.88 on March 11, the stock’s highest price since August. Social media activity preceded a surge in the shares last Tuesday that caught the attention of stakeholders, according to a person with knowledge of the dealmaking over the past week.
Jason Mudrick recognized a familiar opportunity and called on an old partner — AMC’s Aron, who had become a skilled Reddit-whisperer — to help him sell Hycroft on the idea, according to the person familiar. Instead, it also led to a surprise investment offer from the AMC CEO.
Today, Hycroft said it would sell up to US$500 million of additional shares in a future at-the-market issuance. It may use proceeds from that and the AMC investment to help finance new technology to better process its reserves, according to the person familiar.
Hycroft shares fell as much as 9.9 per cent to US$1.37 in New York on Wednesday. AMC climbed as much as 6.9 per cent to US$15.48.
FROM CRYPTO TO GOLD
Aron has attracted retail investor support due to what they say is his willingness to listen to individuals and solicit their ideas on Twitter.
AMC has spent months touting a move into crypto, with plans to create its own token and accept cryptocurrencies as payment, which investors had pushed for amid a broader movement positioning crypto as a new safe haven investment.
But that thesis has come into question in recent weeks after a sell-off in the stock market and concerns about inflation and the war in Ukraine. Gold — the traditional safe haven — has soared to record highs this year.
“That seemed like a pretty good move to me anyways, before I even read the release,” said Jolene Roderick, 37, who bought shares in AMC and Hycroft on Tuesday after the announcement. “Gold is supposed to be considered a relatively safe investment for companies to be adding to their portfolios.”
To some AMC investors, the Hycroft investment is a much-needed pivot away from the movie chain’s traditional business. Zack Dillon, 23, bought more AMC shares after Tuesday’s announcement and is taking a look at Hycroft.
Hycroft potentially has precious metal reserves that could be very beneficial for AMC, he said. “I think that will be a positive outlook for the future for AMC’s revenue.”
Gerardo Maya, 28, owns both AMC and Hycroft shares. He bought Hycroft shares about a year ago and sold last week at a profit amid a Reddit-spurred rally, before quickly buying back in. Hycroft could benefit from a strong retail investor community like AMC’s, he said in an interview, and he plans to buy more shares if there’s a sell-off.
“Everyone who invests in AMC is all about holding, and they see the CEO investing in another company that’s having trouble financially, like Hycroft,” he said. “I can see that helping Hycroft itself.”
Observers may see some irony in AMC’s newfound role as a rescuer. The theater chain itself was itself on the brink of bankruptcy just over a year ago until it, too, caught the sight of rally-happy Redditors.
In a matter of months, AMC’s fate turned dramatically, albeit without much clarity on how the company was going to actually remedy the business. The company discussed creating commemorative nonfungible tokens, or NFTs, related to major films.
More immediately important was the seemingly self-perpetuating narrative in which stock surge begat stock surge, without much consideration for fundamentals.
Aron acknowledged the likeness between the fates of the two companies in AMC’s press release Tuesday. Hycroft “appears to be just like AMC of a year ago,” with “rock-solid assets” but “facing a severe and immediate liquidity issue,” he said. “We are confident that our involvement can greatly help it to surmount its challenges — to its benefit, and to ours.”
Hycroft, which filed for and exited bankruptcy in 2015, rallied as much as 95 per cent Tuesday after AMC said it was taking a 22 per cent equity stake in the company.
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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