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TABLE OF CONTENTS
TABLE OF CONTENTS
As filed with the Securities and Exchange Commission on October 7, 2016
Registration No. 333-213802
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMC ENTERTAINMENT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
7832 (Primary Standard Industrial Classification Code Number) |
26-0303916 (I.R.S. Employer Identification Number) |
One AMC Way
11500 Ash Street
Leawood, Kansas 66211
(913) 213-2000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Kevin M. Connor, Esq.
Senior Vice President, General Counsel and Secretary
One AMC Way
11500 Ash Street
Leawood, Kansas 66211
(913) 213-2000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
| With copies to: | ||
Kirstin P. Salzman Husch Blackwell LLP 4801 Main Street Suite 1000 Kansas City, Missouri 64112 (816) 983-8000 |
Alan J. Prince C. William Baxley King & Spalding LLP 1180 Peachtree Street Atlanta, Georgia 30309 (404) 572-4600 |
|
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and the satisfaction or waiver of all other conditions under the merger agreement described in this registration statement.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer o | Accelerated filer ý | Non-accelerated filer o (Do not check if a smaller reporting company) |
Smaller reporting company o |
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o
CALCULATION OF REGISTRATION FEE
|
||||||||
| Title of Each Class of Securities to be Registered |
Amount to be Registered(1) |
Proposed Maximum Offering Price per Security |
Proposed Maximum Aggregate Offering Price(2) |
Amount of Registration Fees(3)(4) |
||||
|---|---|---|---|---|---|---|---|---|
Class A common stock, par value $0.01 per share |
8,258,171 | Not applicable | $243,442,632.99 | $24,514.67 | ||||
|
||||||||
- (1)
- Represents
the estimated maximum number of shares of Class A common stock of AMC Entertainment Holdings, Inc. ("AMC") to be issued upon
completion of the merger described herein calculated as 30% of the product obtained (rounded down to the nearest whole number) by multiplying (i) 25,443,419, the number of shares of Carmike
Cinemas, Inc. ("Carmike") common stock issued and outstanding as of September 16, 2016 (including 1,054,832 shares of Carmike common stock issuable upon exercise of outstanding stock
options and restricted and performance stock units) and (ii) 1.0819 (the exchange ratio).
- (2)
- Estimated
solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933 (the "Securities Act")
and calculated pursuant to Rule 457(f)(1) and (3) and 457(c) under the Securities Act. The proposed maximum aggregate offering price of shares of AMC's Class A common stock was
calculated based upon the market value of the shares of Carmike common stock to be converted in the merger in accordance with Rule 457(c) and 457(f)(1) and (3) under the Securities Act
as follows: (i) the product of (a) $32.71 (the average of the high and low prices per share of Carmike common stock on September 22, 2016, as quoted on the NASDAQ Global Market)
and (b) 25,443,419, the estimated maximum number of shares of Carmike common stock that may be exchanged for the merger consideration (including shares of Carmike common stock issuable upon
exercise of outstanding stock options and restricted and performance stock units), minus (ii) $588,811,602.50, the estimated aggregate amount of cash consideration to be paid in the merger by
AMC to the former holders of Carmike common stock.
- (3)
- Determined
in accordance with Section 6(b) of the Securities Act by multiplying the proposed maximum aggregate offering price by 0.0001007.
- (4)
- Previously paid.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this proxy statement/prospectus is not complete and may be changed. These securities may not be sold nor may offers to buy be accepted until the registration statement filed with the Securities and Exchange Commission, of which this proxy statement/prospectus is a part, is declared effective. This proxy statement/prospectus is not an offer to sell and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY—SUBJECT TO COMPLETION—DATED OCTOBER 7, 2016
| PROSPECTUS OF AMC ENTERTAINMENT HOLDINGS INC. |
PROXY STATEMENT OF CARMIKE CINEMAS INC. |
To Stockholders of Carmike Cinemas, Inc.:
On July 24, 2016, AMC Entertainment Holdings, Inc., referred to as "AMC," entered into an Amended and Restated Agreement and Plan of Merger, referred to as the "amended and restated merger agreement," with Carmike Cinemas, Inc., referred to as "Carmike," and Congress Merger Subsidiary, Inc., referred to as "Merger Sub," as a result of which Carmike will be acquired by AMC. The amended and restated merger agreement replaced in its entirety an Agreement and Plan of Merger among the parties dated March 3, 2016 referred to as the "original merger agreement." If the amended and restated merger agreement is approved and adopted by the Carmike stockholders and the other conditions to completion of the merger are satisfied or waived, Merger Sub will merge with and into Carmike with Carmike continuing as the surviving corporation and a wholly owned subsidiary of AMC, referred to as the "merger."
The amended and restated merger agreement provides that, each outstanding share of Carmike common stock (except for certain excluded shares) will be converted into the right to receive $33.06 in cash without interest, referred to as the "cash consideration," or 1.0819 shares of AMC Class A common stock, referred to as the "stock consideration." The original merger agreement provided for cash consideration of $30.00 per share of Carmike common stock. Each Carmike stockholder will have an opportunity to make an election to receive the cash consideration or to receive the stock consideration for each share of Carmike common stock they own. This election is subject to proration so that 70% of the total issued and outstanding shares of Carmike common stock will be converted into the right to receive the cash consideration and 30% will be converted into the right to receive the stock consideration. Because elections are subject to proration as described above, you may receive some shares of AMC Class A common stock, rather than cash, even if you elected to receive cash with respect to all of your shares of Carmike common stock (and vice versa). In connection with the merger, you will be provided a form of election for you to elect the form of consideration that you would like to receive in the merger, subject to the proration as described above. It is important that you complete and return the form of election. If you fail to do so, the merger consideration you receive will be entirely outside of your control and will depend on the elections made by other Carmike stockholders, and you could receive all stock, all cash or a mix of stock and cash depending on the elections that are made.
Carmike stockholders are being asked to approve and adopt the amended and restated merger agreement at a reconvened special meeting of stockholders to be held on November 15, 2016, at the offices of King & Spalding LLP, 1180 Peachtree Street, N.E., Atlanta, Georgia 30309, at 10:00 a.m., local time, referred to as the "special meeting." The special meeting was originally convened on June 30, 2016 to consider and vote on the original merger agreement. Adoption of the amended and restated merger agreement requires the vote of Carmike stockholders holding a majority of the outstanding shares of Carmike common stock as of the close of business on September 27, 2016, referred to as the "record date." In addition, at the special meeting you also will be asked to approve, on an advisory (non-binding) basis, the merger-related compensation payments that will or may be paid by Carmike to its named executive officers in connection with the merger and to approve the adjournment of the special meeting under certain circumstances. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting in person, please vote or otherwise submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting.
The Carmike Board of Directors, after considering various factors, has unanimously determined that the amended and restated merger agreement and the transactions contemplated thereby, including the merger, are in the best interest of Carmike and its stockholders and unanimously recommends that you vote for the adoption of the amended and restated merger agreement, for the advisory merger-related compensation proposal and for the adjournment of the special meeting, if necessary, to solicit additional proxies.
A WHITE proxy card is enclosed which is substantially the same as the proxy card included with the original proxy statement for the special meeting mailed on May 25, 2016. As discussed in detail in the accompanying proxy statement/prospectus, any previously delivered proxy will remain valid and effective as to shares you hold on the record date, unless revoked or changed.
Based upon a maximum of 24,388,587 shares of Carmike common stock and 1,054,832 Carmike stock options, restricted stock units or performance stock units expected to be outstanding as of the effective time of the merger, AMC expects to issue, or reserve for issuance, up to 8,258,171 shares of its Class A common stock in connection with the merger. AMC Class A common stock is listed on the NYSE under the symbol "AMC." Carmike common stock is listed on the NASDAQ Global Market under the symbol "CKEC." The market price of AMC Class A common stock will continue to fluctuate following the date of the special meeting. Consequently, at the time of the special meeting, the value of the stock consideration will not yet be determined.
We urge you to read the accompanying proxy statement/prospectus in its entirety. For a discussion of risk factors that you should consider in evaluating the transaction, see "Risk Factors" beginning on page 39 of the attached proxy statement/prospectus.
Sincerely
/s/
S. David Passman III
President and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER OR OTHER TRANSACTIONS DESCRIBED IN THE ATTACHED PROXY STATEMENT/PROSPECTUS OR THE SECURITIES TO BE ISSUED PURSUANT TO THE MERGER UNDER THE ATTACHED PROXY STATEMENT/PROSPECTUS NOR HAVE THEY DETERMINED IF THE ATTACHED PROXY STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The accompanying proxy statement/prospectus is dated [ · ], 2016 and is first being mailed to Carmike stockholders on or about [ · ], 2016.
CARMIKE CINEMAS, INC.
1301 First Avenue
Columbus, Georgia 31901
(706) 576-3400
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Reconvened On November 15, 2016
To the Stockholders of Carmike Cinemas, Inc.:
Notice is hereby given that the special meeting of the stockholders, referred to as the "special meeting," or "reconvened special meeting" of Carmike Cinemas, Inc., a Delaware corporation, referred to as "Carmike" or the "company," which originally was convened and adjourned on June 30, 2016, and subsequently convened and adjourned on July 15, 2016 and July 25, 2016, will reconvene on November 15, 2016 at 10:00 a.m., local time, at the offices of King & Spalding LLP located at 1180 Peachtree Street, N.E., Atlanta, Georgia 30309, for the following purposes:
1. Adoption of the Amended and Restated Merger Agreement. To consider and vote upon a proposal, referred to as the "merger proposal," to adopt the Amended and Restated Plan of Merger, dated July 24, 2016, referred to as the "amended and restated merger agreement" by and among AMC Entertainment Holdings, Inc., a Delaware corporation, referred to as "AMC," Congress Merger Subsidiary, Inc., an indirect wholly owned subsidiary of AMC, referred to as "Merger Sub," and Carmike, pursuant to which Merger Sub will merge with and into Carmike, with Carmike continuing as the surviving corporation, referred to as the "merger."
2. Advisory Vote Regarding Merger-Related Named Executive Officer Compensation. To consider and vote upon a proposal to approve, by a non-binding advisory vote, the compensation arrangements disclosed in the accompanying proxy statement/prospectus that may be payable to Carmike's named executive officers in connection with the completion of the merger, referred to as the "merger-related named executive officer compensation proposal."
3. Adjournment of the Special Meeting. To consider and vote upon a proposal to approve the adjournment of the special meeting from time to time if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the amended and restated merger agreement, referred to as the "adjournment proposal."
Only stockholders of record of Carmike common stock, par value $0.03 per share, referred to as "Carmike common stock," at the close of business on September 27, 2016, referred to as the "record date," are entitled to notice of, and to vote at, the reconvened special meeting or any adjournments or postponements thereof. Carmike will make available an alphabetical list of its stockholders of record for examination by any Carmike stockholder for any purpose germane to the special meeting at Carmike's principal executive offices, 1301 First Avenue, Columbus, Georgia 31901, during ordinary business hours for the ten days prior to the reconvening of special meeting and shall keep such list at the special meeting until the end of the special meeting.
The approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Carmike common stock entitled to vote at the special meeting. The approval of each of the merger-related named executive officer compensation proposal and the adjournment proposal (if a quorum is present) requires the affirmative vote of holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote at the meeting. The approval of the adjournment proposal (where a quorum is not present) requires the affirmative vote of holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote on the matter. The vote to approve the merger-related named executive officer
compensation proposal is advisory only, will not be binding on Carmike or AMC and is not a condition to the completion of the merger.
Even if you plan to attend the special meeting in person, you should vote as soon as possible via the internet or telephone or you should sign, date and return the enclosed proxy card and thus ensure that your shares will be represented at the special meeting if you are unable to attend. If you do attend the special meeting and wish to vote in person, you may withdraw your proxy at that time.
If your shares of Carmike common stock are held in street name through a broker, bank or other nominee, you should instruct your broker, bank or other nominee, each referred to as a "nominee," how to vote in accordance with the voting instruction form furnished by your nominee. If you fail to instruct your nominee on how to vote, the effect will be the same as a vote against the merger proposal.
On May 25, 2016, Carmike mailed a proxy statement with respect to the special meeting originally convened on June 30, 2016, referred to as the "original proxy statement." Carmike has enclosed a WHITE proxy card with this proxy statement/prospectus. This WHITE proxy card is substantially the same as the proxy card attached to the original proxy statement, referred to as the "original proxy card." Any proxies previously delivered by a stockholder of record on the record date, including by delivery of the original proxy card, will be valid and effective and voted in the manner set forth on the previously delivered proxy unless such stockholder revokes such proxy or changes such proxy. Such previously delivered proxies will be deemed to cover the number of shares you own on the record date even if that number is more than or less than the number of shares you owned on May 18, 2016, the original record date for the special meeting, referred to as the "original record date." If you held shares in "street name" through a nominee on the original record date and continue to own such shares at that nominee, and have already provided voting instructions with respect to such shares, such shares will be voted as directed by such voting instructions and you do not need to take any action, unless you wish to revoke or change such voting instructions. Such previously delivered voting instructions will be deemed to cover the number of shares you own on the record date, even if that number is more than or less than the number of shares you owned on the original record date. If you held shares in "street name" through a nominee on the original record date, but have acquired shares after the original record date, and you are the stockholder of record of those newly acquired shares, then, whether or not you previously gave a voting instruction with respect to the shares that you held on the original record date, those newly acquired shares will not be voted unless you give a proxy with respect to those shares by completing, signing, dating and returning the enclosed proxy card or by following the instructions on the enclosed proxy card for internet or telephone submissions or you attend the special meeting and vote in person. If you held shares in "street name" through a nominee on the original record date, but have acquired shares in "street name" after the original record date through a different nominee, then, whether or not you previously gave a voting instruction with respect to the shares that you held on the original record date, those newly acquired shares will not be voted unless you instruct your nominee how to vote in accordance with the voting instruction form furnished by nominee.
YOUR VOTE IS IMPORTANT. FAILURE TO VOTE YOUR SHARES WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" THE MERGER PROPOSAL. YOU MAY VOTE BY MAIL, INTERNET OR TELEPHONE OR BY ATTENDING THE SPECIAL MEETING AND VOTING BY BALLOT, ALL AS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS.
To vote your shares, please follow the instructions on the enclosed proxy card or voting instruction form. If you are unsure whether you have previously voted, or if you have acquired shares after the original record date and are unsure whether your original proxy card or voting instructions will apply to your newly acquired shares, you can submit your vote again by following the instructions on the enclosed proxy card or voting instruction form. Whether or not you plan to attend the special meeting, please submit your proxy to vote your shares at your earliest convenience. If you do attend the special meeting and wish to vote in person, you may withdraw your proxy at that time. You can revoke your
proxy or change your vote at any time before it is exercised by giving written notice to Carmike's Corporate Secretary at Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attn: Corporate Secretary, specifying such revocation or change in vote. You may also change your vote by delivery of a valid, later-dated proxy prior to the special meeting or by attending and voting at the special meeting.
If your shares of Carmike common stock are held in "street name" through a nominee, and you have not previously provided voting instructions with respect to such shares or you wish to revoke or change such instructions, you should instruct your nominee how to vote, or revoke previously delivered voting instructions, in accordance with the voting instruction form furnished by your nominee. If you fail to vote on the merger proposal or fail to instruct your nominee on how to vote, the effect will be the same as a vote against the adoption of the merger proposal.
The accompanying proxy statement/prospectus provides a detailed description of the merger, the amended and restated merger agreement and the other proposals to be voted upon at the special meeting. You should read the accompanying proxy statement/prospectus, including the annexes and any documents incorporated by reference, carefully and in their entirety. If you have any questions concerning the merger or the accompanying proxy statement/prospectus, would like additional copies of the proxy statement/prospectus or need help voting your shares of Carmike common stock, please contact Carmike's proxy solicitor:
Innisfree
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders
call toll-free: (888) 750-5834
Banks and brokers call collect: (212) 750-5833
| By Order of the Board of Directors, | ||
Daniel E. Ellis Senior Vice President, General Counsel and Secretary |
Columbus, Georgia
[ · ], 2016
Ensure that your shares of Carmike common stock are voted at the special meeting by submitting your proxy or, if your shares of Carmike common stock are held in street name through a broker, bank or other nominee, contacting your broker, bank or other nominee. If you do not vote, it will have the same effect as voting "AGAINST" the merger proposal but will have no effect on the outcome of the merger-related named executive officer compensation proposal or the adjournment proposal. If you do not instruct your broker, bank or other nominee how to vote on any matter, the broker, bank or other nominee will not have discretion to vote on any proposal, including the merger proposal. When a broker, bank or other nominee votes a client's shares on some but not all of the proposals presented at a meeting, each non-routine proposal for which the broker, bank or nominee cannot vote is referred to herein as a "broker non-vote." A broker non-vote will have the same effect as voting "AGAINST" the merger proposal, the merger-related named executive officer compensation proposal and the adjournment proposal (if a quorum is present). A broker non-vote will have no effect on the adjournment proposal (if no quorum is present). Proxies delivered at any time prior to the record date, including those solicited in connection with the original merger agreement, will be valid and effective so long as the stockholder providing the proxy is a stockholder on September 27, 2016, the record date for the reconvened special meeting.
If your shares of Carmike common stock are registered in street name through a broker, bank or other nominee: check the voting instruction card forwarded by your broker, bank or other nominee or contact your broker, bank or other nominee in order to obtain directions as to how to ensure that your shares of Carmike common stock are voted in favor of the proposals at the special meeting.
If your shares of Carmike common stock are registered in your name: submit your proxy as soon as possible via the internet or telephone or by signing, dating and returning the enclosed proxy card in the enclosed postage-paid envelope so that your shares of Carmike common stock can be voted in favor of the proposals at the special meeting.
The table below summarizes the votes required and treatment of votes described above:
Proposal Number |
Item | Board Voting Recommendation |
Votes Required for Approval |
Abstentions | Broker Non-Vote |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
1 |
Merger Proposal | FOR | Holders of a majority of the outstanding shares of Carmike common stock entitled to vote at the special meeting | Count as votes against | Count as votes against | ||||||
2 |
Merger-Related Named Executive Officer Compensation Proposal | FOR | Holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote at the special meeting | Count as votes against | Count as votes against | ||||||
3 |
Adjournment Proposal (if no quorum) | FOR | Holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote at the special meeting | Count as votes against | Count as votes against | ||||||
|
Adjournment Proposal (if no quorum) | Holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote on the matter | Count as votes against | No effect |
If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact Carmike's proxy solicitor at:
Innisfree
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders
call toll-free: (888) 750-5834
Banks and brokers call collect: (212) 750-5833
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This proxy statement/prospectus incorporates important business and financial information about Carmike Cinemas, Inc., referred to as "Carmike," and AMC Entertainment Holdings, Inc., referred to as "AMC," from other documents that Carmike and AMC have filed with the U.S. Securities and Exchange Commission, referred to as the "SEC," and that are contained in or incorporated by reference into this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus. This information is available for you to review without charge at the SEC's public reference room at Station Place, 100 F Street, N.E., Washington, D.C. 20549, and through the SEC's website at www.sec.gov.
Any person may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus without charge, by written request directed to Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attn: Corporate Secretary, or by calling the Corporate Secretary at (706) 576-3400. You may also obtain documents incorporated by reference by requesting them by telephone from Innisfree M&A Incorporated, Carmike's proxy solicitation firm, toll-free at (888) 750-5834. Banks and brokers may call collect at (212) 750-5833.
You may also request a copy of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus without charge, by written request directed to AMC Entertainment Holdings, Inc., One AMC Way, 11500 Ash Street, Leawood, Kansas 66211 Attn: John Merriweather, or by calling John Merriwether at (866) 248-3872. You may also obtain a copy of this proxy statement/prospectus and any of the documents incorporated by reference without charge from the SEC website address provided above.
In order for you to receive timely delivery of the documents in advance of the reconvened special meeting of Carmike shareholders, referred to as the "special meeting," to be held on November 15, 2016, you must request the information by November 8, 2016.
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form S-4, referred to as the "registration statement," filed with the SEC by AMC (File No. 333-213802), constitutes a prospectus of AMC under Section 5 of the Securities Act of 1933, as amended, referred to as the "Securities Act," with respect to the shares of Class A common stock of AMC, to be issued to Carmike stockholders pursuant to the Amended and Restated Agreement and Plan of Merger, dated as of July 24, 2016, and as it may be further amended from time to time, which is referred to as the "amended and restated merger agreement," by and among Carmike, AMC and Congress Merger Subsidiary, Inc., referred to as "Merger Sub," pursuant to which Merger Sub will merge with and into Carmike with Carmike continuing as the surviving corporation, referred to as the "merger." This document also constitutes a proxy statement of Carmike under Section 14(a) of the Securities Exchange Act of 1934, as amended, referred to as the "Exchange Act." It also constitutes a notice with respect to the reconvening of the special meeting of Carmike stockholders, at which Carmike stockholders will be asked to consider and vote upon the proposal to approve the amended and restated merger agreement.
AMC has supplied all information contained or incorporated by reference in this proxy statement/prospectus relating to AMC, and Carmike has supplied all such information relating to Carmike. AMC and Carmike have not authorized anyone to provide you with information that is different from what is contained in this proxy statement/prospectus.
You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated October [ · ], 2016. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Carmike stockholders nor the issuance by AMC of shares of Class A common stock pursuant to the merger will create any implication to the contrary.
This proxy statement/prospectus does not constitute an offer to sell or a solicitation of or offer to buy any securities, or the solicitation of a proxy, in any jurisdiction where or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following questions and answers are intended to address some commonly asked questions regarding the special meeting and the merger. These questions and answers may not address all questions that may be important to you as a holder of Carmike common stock. Please refer to the more detailed information contained elsewhere in this proxy statement/prospectus, the annexes to this proxy statement/prospectus and the documents referred to or incorporated by reference in this proxy statement/prospectus.
In this proxy statement/prospectus:
- •
- "AMC" means AMC Entertainment Holdings, Inc.,
- •
- "AMC Board" means the AMC Board of Directors,
- •
- "AMC Class A common stock" means the Class A common stock, par value $0.01 per share of AMC,
- •
- "Amended and restated merger agreement" means the Amended and Restated Agreement and Plan of Merger, dated as of July 24, 2016,
as it may be further amended from time to time, by and among Carmike, AMC and Merger Sub, a copy of which is included as Annex A to this proxy statement/prospectus,
- •
- "Cash consideration" means $33.06 in cash, without interest,
- •
- "Carmike" means Carmike Cinemas, Inc.,
- •
- "Carmike Board" means the Carmike Board of Directors,
- •
- "Carmike common stock" means the common stock, par value $0.03 per share of Carmike,
- •
- "Merger," means the merger of Merger Sub with and into Carmike, with Carmike surviving as an indirect wholly owned subsidiary of AMC,
- •
- "Merger consideration" means the combination of the cash consideration and the stock consideration,
- •
- "Original merger agreement" means the Agreement and Plan of Merger, dated as of March 3, 2016, by and among Carmike, AMC and
Merger Sub,
- •
- "Original proxy card" means the proxy card attached to the original proxy statement,
- •
- "Original proxy statement" means the proxy statement mailed on May 25, 2016 in connection with the original convening of this
special meeting,
- •
- "Stock consideration" means 1.0819 shares of AMC Class A common stock, and
- •
- "Merger Sub" means Congress Merger Subsidiary, Inc., an indirect wholly-owned subsidiary of AMC.
- Q:
- Why am I receiving these materials?
- A:
- On
July 24, 2016, Carmike, AMC and Merger Sub entered into the amended and restated merger agreement. This proxy statement/prospectus provides
important information about the amended and restated merger agreement and replaces in its entirety the original proxy statement.
You are receiving this proxy statement/prospectus and the accompanying proxy card because you owned shares of Carmike common stock at the close of business on September 27, 2016, the record date for the reconvened special meeting of Carmike stockholders, referred to as the "special meeting" or the "reconvened special meeting." The Carmike Board is soliciting proxies for use at the special meeting to consider and vote upon the proposal to adopt the amended and
1
restated merger agreement and the other proposals to be voted upon at the special meeting. These materials provide you information for use in determining how to vote in connection with the matters to be considered at the special meeting and in making an election with respect to the merger consideration described below.
- Q:
- What is the effect of the amended and restated merger agreement?
- A:
- The
effect of the amended and restated merger agreement is to provide for an increase in the merger consideration to be paid to Carmike stockholders from
$30.00 per share of Carmike common stock, in cash, without interest, to either (i) $33.06 in cash, without interest, referred to as the "cash consideration," or (ii) 1.0819 shares of AMC
Class A common stock (such amount of AMC Class A common stock referred to as the "stock consideration" and the combination of the cash consideration and the stock consideration referred
to as the "merger consideration,") less any applicable withholding taxes. Each Carmike stockholder will have the opportunity to make an election to receive either the cash consideration or the stock
consideration, subject to proration so that 70% of the total number of shares Carmike common stock issued and outstanding at the effective time (excluding any treasury shares, any shares owned by
Carmike, AMC, Merger Sub or any of their subsidiaries, referred to in the aggregate as "excluded shares") will be converted into cash and 30% of the Carmike shares will be converted into shares of AMC
Class A common stock.
The amended and restated merger agreement also adds certain closing conditions, including a requirement that the shares of AMC Class A common stock to be issued to the holders of Carmike common stock upon consummation of the merger be authorized for listing on the NYSE, subject to official notice of issuance and that this registration statement remains effective under the Securities Act. In addition, Carmike's obligation to complete the merger is also conditioned on the absence of an AMC material adverse effect (as described in "Terms of the Amended and Restated Merger Agreement—Representations and Warranties" on page 116 of this proxy statement/prospectus) following the signing of the amended and restated merger agreement. If this registration statement has not become effective by October 25, 2016, then, subject to certain exceptions, either Carmike or AMC may extend the "End Date" (i.e., December 5, 2016) for an additional period of time not to exceed 90 days.
- Q:
- What is the proposed transaction?
- A:
- Under
the terms of the amended and restated merger agreement, upon completion of the merger, Merger Sub will be merged with and into Carmike, with Carmike
continuing as the surviving corporation and as an indirect wholly owned subsidiary of AMC. After the merger is completed, Carmike common stock will cease to be traded on NASDAQ, the registration of
Carmike common stock under the Exchange Act will be terminated and Carmike will no longer be required to file periodic reports with the SEC.
- Q:
- When and where is the special meeting?
- A:
- The
special meeting will be reconvened on November 15, 2016, at 10:00 a.m., local time, at the offices of King & Spalding LLP
located at 1180 Peachtree Street, N.E., Atlanta, Georgia 30309.
- Q:
- What matters will be voted on at the special meeting?
- A:
- Carmike
will ask you to consider and vote upon:
- (1)
- a proposal to adopt the amended and restated merger agreement, approving the transactions contemplated thereby, including the merger, referred to as the "merger proposal;"
2
- (2)
- a
proposal to approve, by a non-binding advisory vote, the compensation arrangements disclosed in this proxy statement/prospectus that may be payable to
Carmike's named executive officers in connection with the completion of the merger, referred to as the "merger-related executive officer compensation proposal;" and
- (3)
- a
proposal to approve the adjournment of the special meeting from time to time if necessary or appropriate, including to solicit additional proxies if there
are not sufficient votes at the time of the special meeting to adopt the amended and restated merger agreement, referred to as the "adjournment proposal."
- Q:
- What will I receive if the merger is completed?
At your election, you will have the right to receive the cash consideration, without interest or the stock consideration, less any applicable withholding taxes, for each share of Carmike common stock you own, subject to proration so that 70% of the total number of shares of Carmike common stock issued and outstanding at the effective time of the merger (excluding any excluded shares) will be converted into cash and 30% of the Carmike shares will be converted into shares of AMC Class A common stock.
Because elections are subject to proration as described below, you may receive some shares of AMC Class A common stock, rather than cash, even if you elected to receive cash with respect to all your shares of Carmike common stock (and vice versa).
- Q:
- How do the proration mechanics work?
Assuming that the total number of shares of Carmike common stock issued and outstanding and subject to proration as of the effective time of the merger is 25,000,000, if holders of 7,500,000 shares of Carmike common stock elect to receive the stock consideration and the holders of the remaining 17,500,000 shares of Carmike common stock elect to receive the cash consideration, then no proration will be necessary. Otherwise, the following examples illustrate the mechanics of proration if the shares of AMC Class A common stock are either oversubscribed or undersubscribed to ensure that in either case, 70% of the total number of shares Carmike common stock issued and outstanding at the effective time are converted into cash and 30% of the Carmike common shares will be converted into shares of AMC Class A common stock.
Oversubscription of Stock Election Example. Assuming that the total number of shares of Carmike common stock outstanding and subject to proration as of the effective time of the merger is 25,000,000, if in connection with the merger, Carmike stockholders elect to receive, in aggregate, stock consideration with respect to 9,000,000 shares of Carmike common stock and cash consideration with respect to 16,000,000 shares of Carmike common stock, then (i) all holders of Carmike common stock electing to receive the cash consideration and all holders of Carmike common stock not making an election will have their shares converted into the right to receive the cash consideration and (ii) all holders of Carmike common stock electing to receive AMC Class A common stock will receive stock consideration with respect to a percentage of such shares determined by the fraction of 7,500,000/9,000,000, or 83.33%, and will receive the cash consideration with respect to the remaining 16.67% of their shares of Carmike common stock.
Undersubscription of Stock Election Example. If in connection with the merger, Carmike stockholders elect to receive stock consideration with respect to less than 30% of the outstanding shares of Carmike common stock, (i) all holders of Carmike common stock electing to receive stock consideration will have their shares converted into the right to receive the stock consideration and (ii) those Carmike stockholders who elected to receive cash consideration or who have made no election will be treated in the following manner, depending on whether the number of shares held by Carmike stockholders who have made no election is sufficient to make
3
- (a)
- Assuming
that the total number of shares of Carmike common stock outstanding and subject to proration as of the effective time of the merger is 25,000,000,
if in connection with the merger, Carmike stockholders elect to receive, in the aggregate, cash consideration with respect to 16,000,000 shares of Carmike common stock and stock consideration with
respect to 1,000,000 shares of Carmike common stock, and Carmike stockholders fail to make an election or make a non-election with respect to 8,000,000 shares of Carmike common stock,
then:
- •
- all holders of Carmike common stock electing to receive the cash consideration will receive such cash consideration;
- •
- all holders of Carmike common stock electing to receive the stock consideration will receive such stock consideration;
and
- •
- all holders of Carmike common stock failing to make an election or making a non-election will receive stock consideration
with respect to a percentage of such shares determined by a fraction of 6,500,000/8,000,000, or 81.25%, and will receive cash consideration with respect to the remaining 18.75% of their shares of
Carmike common stock; and
- (b)
- Assuming
that the total number of shares of Carmike common stock outstanding and subject to proration as of the effective time of the merger is 25,000,000,
if in connection with the merger, Carmike stockholders elect to receive, in the aggregate, cash consideration with respect to 18,000,000 shares of Carmike common stock and stock consideration with
respect to 1,000,000 shares of Carmike common stock, and Carmike stockholders fail to make an election or make a non-election with respect to 6,000,000 shares of Carmike common stock,
then:
- •
- all holders of Carmike common stock failing to make an election or making a non-election will receive stock
consideration;
- •
- all holders of Carmike common stock electing to receive the stock consideration will receive such stock consideration;
and
- •
- all holders of Carmike common stock electing to receive the cash consideration will receive stock consideration with respect to such number of their shares determined by multiplying the number of shares for which such holder has elected to receive cash consideration by a fraction of 500,000/18,000,000, or 2.78%, and will receive cash consideration with respect to the remaining 97.22% of their shares of Carmike common stock.
up the shortfall in the number of shares required to reach 30% of the total number of Carmike common stock outstanding:
Carmike stockholders who fail to make a valid election for any reason will be deemed to have made a non-election and will have no control over the type of merger consideration that they receive with respect to their shares of Carmike common stock. The type of per share merger consideration that these non-election stockholders receive will depend on the extent to which the stock election is oversubscribed or undersubscribed, and these non-election stockholders could receive all stock, all cash or a mix of stock and cash depending on the elections that are made.
In addition, solely for the purposes of calculating the proration of shares, shares of Carmike common stock that constitute dissenting shares as of the election deadline will be treated as having elected to receive cash consideration and will be deemed to have been converted into cash for purposes of determining whether 70% of the total number of shares of Carmike common stock issued and outstanding at the effective time of the merger have been converted into cash and 30% of the Carmike shares have been converted into shares of AMC Class A common stock.
4
- Q:
- How do I calculate the value of the per share merger consideration?
- A:
- Because
AMC will pay a fixed amount of cash and issue a fixed number of shares of AMC Class A common stock as part of the merger consideration, the
value of the merger consideration will depend in part on the price per share on the NYSE of AMC Class A common stock at the time the merger is completed. That price will not be known at the
time of the special meeting and may be greater or less than the price of AMC Class A common stock on the date prior to the amended and restated merger agreement was executed and publically
announced, the current price of AMC Class A common stock or the price of AMC Class A common stock at the time of the special meeting.
Based on the closing price of $30.60 of AMC Class A common stock on the NYSE on July 22, 2016, the last trading day before the execution and public announcement of the amended and restated merger agreement, the stock consideration represented approximately $33.11 per share of Carmike common stock. Based on the closing price of $31.94 per share of AMC Class A common stock on NYSE on October 5, 2016, the latest practicable date before the filing of this registration statement, the stock consideration represented approximately $34.56 per share of Carmike common stock.
- Q:
- What happens if I am eligible to receive a fraction of a share of AMC Class A common stock as part of the merger
consideration?
- A:
- If
the aggregate number of shares of AMC Class A common stock that you are entitled to receive as part of the merger consideration includes a fraction
of a share of AMC Class A common stock, you will receive cash in lieu of that fractional share. See "Terms of the Amended and Restated Merger
Agreement—Exchange of Shares in the Merger" beginning on page 114 of this proxy statement/prospectus.
- Q:
- How do I make an election for the type of merger consideration that I prefer?
- A:
- You
will receive a form of election which allows you, subject to the limitations set forth in the amended and restated merger agreement, to elect the type of
merger consideration you will receive in the merger, including a stock election, a cash election, or a combination of both. You should carefully review and follow the instructions that will be set
forth in the form of election. In order to make a proper election, Carmike stockholders must submit their form of election no later than 5:00 p.m. local time on the date that is five business
days prior to the closing date.
AMC will prepare a form of election reasonably acceptable to Carmike and will cause the exchange agent to send this form of election to holders of Carmike common stock, restricted stock, restricted stock units and performance shares no later than 30 days prior to the anticipated election deadline. The form of election will specify that the delivery of the certificates or the transfer of uncertificated shares to the exchange agent will be effected only upon proper delivery of the stock certificates (or affidavits of loss in lieu thereof) or transfer of uncertificated shares to the exchange agent. See "Terms of the Amended and Restated Merger Agreement—Cash/Stock Election" beginning on page 111 of this proxy statement/prospectus.
To make a valid election, Computershare Trust Company, N.A., as the exchange agent, must receive a properly completed and signed form of election by the election deadline, together with duly endorsed stock certificates or appropriate guarantee of delivery (except with respect to book-entry shares, in which case the instructions on the form of election should be followed), as further described in the form of election, a copy of which will be mailed to you. YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD, AND YOU SHOULD NOT FORWARD YOUR STOCK CERTIFICATES TO THE EXCHANGE AGENT WITHOUT A FORM OF ELECTION.
5
- Q:
- Am I guaranteed to receive what I ask for on the form of election?
- A:
- No.
Your election is subject to proration, adjustment and certain limitations as set forth in the amended and restated merger agreement. If you make a stock
election and the stock election is oversubscribed, then you will receive a portion of the merger consideration in cash. Similarly, if you make a cash election and the stock election is
undersubscribed, then you will receive a portion of the merger consideration in AMC Class A common stock. Accordingly, you may not receive exactly the type of consideration that you elect to
receive. You instead will receive a mix of stock and cash calculated based on (i) the number of Carmike common shares making each type of election and (ii) the requirement under the
amended and restated merger agreement that 70% of the total shares held by all Carmike stockholders are converted into cash and 30% of the total shares held by all Carmike stockholders are converted
into shares of AMC Class A common stock. See "Terms of the Amended and Restated Merger Agreement—Proration and Allocation" beginning
on page 113 of this proxy statement/prospectus.
- Q:
- How do I make an election if my Carmike shares are held in "street name" by my bank, brokerage firm or other
nominee?
- A:
- If
you hold your Carmike common stock in "street name" through a bank, brokerage firm or other nominee, referred to as a "nominee," you should instruct such
nominee what election to make on your behalf by carefully following the instructions that you will receive from your nominee. An election will not be made on your behalf absent your instructions. You
may be subject to an earlier deadline for making your election. Please contact your nominee with any questions.
- Q:
- What is the deadline for making an election?
- A:
- Your
election, to be properly made, must be received by the exchange agent by 5:00 p.m. on the date that is five business days preceding the closing
date of the merger. AMC and Carmike will announce the election deadline in a press release, on their websites and in a filing with the SEC.
- Q:
- What happens if I do not send a form of election or it is not received by the election
deadline?
- A:
- If
the exchange agent does not receive a properly completed form of election from you at or prior to the election deadline (together with any stock
certificates representing the shares of Carmike common stock covered by your election or a guarantee of delivery as described in the form of election), then you will be deemed to have made a
non-election with respect to your shares of Carmike common stock. As such, the merger consideration you receive will depend on the extent to which the stock election is oversubscribed or
undersubscribed, and you could receive all stock, all cash or a mix of stock and cash depending on the elections that are made. You bear the risk of proper and timely delivery of all the materials
that you are required to submit to the exchange agent in order to properly make an election.
- Q:
- Can I change my election after the form of election has been submitted?
- A:
- Yes. You may revoke your election at or prior to the election deadline by submitting a written notice of revocation to the exchange agent or by submitting new election materials. Revocations must specify the name in which your shares are registered on the share transfer books of Carmike and any other information that the exchange agent may request. If you wish to submit a new election, you must do so in accordance with the election procedures described in this proxy statement/prospectus and the form of election. If you instructed a nominee holder to submit an election for your shares, you must follow your nominee's directions for changing those instructions. The notice of revocation must be received by the exchange agent at or prior to the election deadline in order for the revocation or new election to be valid.
6
- Q:
- Is the merger subject to the satisfaction of any conditions?
- A.
- Yes.
In addition to the approval of the merger proposal by Carmike's stockholders, the merger is subject to the satisfaction of various conditions. The
merger is not conditioned upon the receipt of any financing by AMC. For a description of these conditions, please see "Terms of the Amended and Restated Merger
Agreement—Conditions to Completion of the Merger" beginning on page 134 of this proxy statement/prospectus.
- Q:
- Who is entitled to vote at the special meeting?
- A:
- All
stockholders of record as of the close of business on September 27, 2016, the record date for the special meeting, are entitled to vote at the
special meeting. As of the record date, there were 24,388,587 shares of Carmike common stock outstanding and entitled to vote. As of the record date, Carmike executive officers and directors, together
with their affiliates, owned an aggregate of 589,860 shares of Carmike common stock, which represents 2.42% of all shares outstanding and entitled to vote at the special meeting.
- Q:
- What happens if I sell or transfer my shares of Carmike common stock after the record date, but before the special
meeting?
- A:
- If
you sell or transfer your shares of Carmike common stock after the record date, but before the special meeting, you will transfer the right to receive the
merger consideration, if the merger is completed, to the person to whom you sell or transfer your shares of Carmike common stock, but you will retain your right to vote those shares at the special
meeting. If you transfer your shares of Carmike common stock after you have properly made an election, such transfer will automatically revoke such prior election.
- Q:
- What vote is required to approve the merger proposal and thereby approve the
merger?
- A:
- Under
Delaware law, and as a condition to the completion of the merger, approval of the merger proposal requires the affirmative vote of the holders of a
majority of the outstanding shares of Carmike common stock entitled to vote at the special meeting. Accordingly, (1) a Carmike stockholder's failure to submit a proxy card or to vote in person
at the special meeting, (2) an abstention from voting or (3) a broker non-vote will have the same effect as a vote "AGAINST" the merger proposal.
- Q:
- What vote is required for the merger-related named executive officer compensation
proposal?
- A:
- Assuming
a quorum is present, approval of the merger-related named executive officer compensation proposal requires the affirmative vote of the holders of a
majority of the shares of Carmike common stock that are present at the special meeting in person or by proxy and entitled to vote at the meeting. Abstentions and broker non-votes, if any, will have
the same effect as a vote "AGAINST" the merger-related named executive officer compensation proposal. Shares not in attendance at the special meeting will have no effect on the outcome of any vote on
the merger-related named executive officer compensation proposal.
- Q:
- What vote is required for the adjournment proposal?
- A:
- Assuming a quorum is present, approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of Carmike common stock that are present at the special meeting in person or by proxy and entitled to vote at the meeting. If a quorum is present, abstentions and broker non-votes, if any, will have the same effect as a vote "AGAINST" the adjournment proposal. Shares not in attendance at the special meeting will have no effect on the outcome of any vote on the adjournment proposal. If a quorum is not present, approval of the
7
adjournment proposal will require the affirmative vote of the holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote on such matter. If a quorum is not present, abstentions will have the same effect as votes "AGAINST" the adjournment proposal and broker non-votes, if any, will have no effect on the adjournment proposal. Under Carmike's by-laws, the presiding officer of the special meeting and the Chief Executive Officer of Carmike each also have the independent authority to adjourn the special meeting regardless of the outcome of the vote on the adjournment proposal.
- Q:
- What is "merger-related compensation?"
- A:
- "Merger-related
compensation" is certain compensation that is tied to or based on the completion of the merger and may be payable to Carmike's named
executive officers under Carmike's existing plans or agreements, which is the subject of the merger-related named executive officer compensation proposal. See "Proposal
2—Advisory Vote on Merger-Related Named Executive Officer Compensation" beginning on page 159 of this proxy statement/prospectus.
- Q:
- Why am I being asked to cast a non-binding, advisory vote to approve "merger-related compensation" payable to Carmike's named
executive officers under its plans or agreements?
- A:
- In
accordance with the rules promulgated under the Exchange Act, Carmike is providing its stockholders with the opportunity to cast a non-binding, advisory
vote on the merger-related named executive officer compensation proposal on the compensation that may be payable to its named executive officers in connection with the merger.
- Q:
- What will happen if the stockholders do not approve the "merger-related compensation" in the merger-related named executive officer
compensation proposal at the special meeting?
- A:
- Approval
of the merger-related named executive officer compensation proposal is not a condition to the completion of the merger. The vote with respect to the
merger-related named executive officer compensation proposal is an advisory vote and will not be binding on Carmike or AMC. Further, the underlying compensation plans and agreements are contractual in
nature and are not, by their terms, subject to stockholder approval. Accordingly, payment of the "merger-related compensation" is not contingent on stockholder approval of the merger-related named
executive officer compensation proposal.
- Q:
- What constitutes a quorum?
- A:
- At
the special meeting, stockholders holding a majority of the outstanding shares entitled to vote at the special meeting, represented in person or by proxy,
will constitute a quorum. When a quorum is present to organize a meeting, it is not broken by the subsequent withdrawal of any stockholders. Abstentions and broker non-votes are considered as present
for the purpose of determining the presence of a quorum.
- Q:
- Did the Carmike Board receive an updated fairness opinion from its financial
advisor?
- A:
- Yes, on July 24, 2016, J.P. Morgan delivered to the Carmike Board an updated fairness opinion to the effect that as of July 24, 2016, and based upon and subject to the factors and assumptions set forth in its opinion, the aggregate merger consideration to be paid to holders of Carmike's common stock in the merger was fair, from a financial point of view, to such stockholders.
8
- Q:
- How does the Carmike Board recommend that I vote?
- A:
- The
Carmike Board of Directors recommends that Carmike stockholders vote:
- (1)
- "FOR" the merger proposal, approving the transactions contemplated thereby, including the merger;
- (2)
- "FOR" the merger-related named executive officer compensation proposal; and
- (3)
- "FOR" the adjournment proposal.
See "Proposal 1—Adoption of the Amended and Restated Merger Agreement-Carmike's Reasons for the Merger" beginning on page 72 of this proxy statement/prospectus.
- Q:
- What is the difference between holding shares as a stockholder of record and a beneficial
owner?
- A:
- Most
of Carmike stockholders hold their shares through a nominee rather than directly in their own name. As summarized below, there are some distinctions
between shares held of record and those owned beneficially.
- •
- Stockholder of Record. If your shares are registered
directly in your name with Carmike's transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares and this proxy
statement/prospectus is being sent directly to you by Carmike. As the stockholder of record, you have the right to grant your voting proxy directly to the proxies named in the enclosed proxy card or
to vote your shares in person at the special meeting. A proxy card is enclosed for you to use.
- •
- Beneficial Owner. If your shares are held in a brokerage
account or by a nominee, you are considered the beneficial owner of shares held in "street name," and this proxy statement/prospectus is being forwarded to you, together with a voting instruction
card, by your nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your nominee on how to vote your shares and you
are also invited to attend the special meeting where you may vote your shares in person by following the procedure described below.
- Q:
- How do I vote my shares of Carmike common stock?
- A:
- Before
you vote, you should carefully read and consider the information contained in or incorporated by reference in this proxy statement/prospectus,
including the annexes. You should also determine whether you hold your shares of Carmike common stock directly in your name as a stockholder of record or through a nominee, because this will determine
the procedure that you must follow in order to vote. You are a stockholder of record if you hold your Carmike common stock in certificate form or if you hold your Carmike common stock in your name
directly with Carmike's transfer agent, American Stock Transfer & Trust Company. If you are a stockholder of record, you may vote in any of the following
ways:
- •
- Via the Internet—If you choose to grant a proxy via the internet, go to
the website indicated on the enclosed proxy card and follow the easy instructions. You will need the control number shown on your proxy card in order to vote.
- •
- Via Telephone—If you choose to grant a proxy via telephone, use a
touch-tone telephone to call the phone number indicated on the enclosed proxy card and follow the easy voice prompts. You will need the control number shown on your proxy card in order to vote.
- •
- Via Mail—If you choose to grant a proxy by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope provided. If the envelope is missing, please mail your completed proxy card to American Stock Transfer & Trust Company LLC, 6201 15th Avenue,
9
- •
- At the Special Meeting—Stockholders of record who attend the special
meeting may vote in person by filling out a ballot at the meeting, and any previously submitted proxies will be revoked by the vote cast at the special meeting. Even if you intend to attend and vote
at the special meeting, the Carmike Board recommends that you grant a proxy via the internet, telephone or mail in case you are later unable to attend the special meeting to ensure that your vote is
counted.
Brooklyn, NY 11219, Attn: Proxy Department. Proxy cards that are returned without a signature will not be counted as present at the special meeting and cannot be voted.
- Q:
- If I hold my shares through a nominee, will my nominee vote my shares for me?
- A:
- Your
nominee will only be permitted to vote your shares if you instruct your nominee how to vote. You should follow the procedures provided by your nominee
regarding the voting of your shares. If you have not instructed and do not instruct your nominee to vote your shares, your shares will not be voted, which will be treated as a vote "AGAINST" the
proposal to adopt the amended and restated merger agreement.
If you do not provide voting instructions to your nominee, your nominee may not vote your shares on the merger proposal, the merger-related named executive officer compensation proposal or the adjournment proposal without specific instructions from you.
- Q:
- What happens if I return my proxy card but I do not indicate how to vote?
- A:
- If
you sign and properly return your proxy card, but do not include instructions on how to vote, your shares of Carmike common stock will be
voted:
- (1)
- "FOR" the merger proposal, approving the transactions contemplated thereby, including the merger;
- (2)
- "FOR" the merger-related named executive officer compensation proposal; and
- (3)
- "FOR" the adjournment proposal.
Carmike does not currently intend to present any other proposals for consideration at the special meeting. If other proposals requiring a vote of stockholders are brought before the special meeting in a proper manner, the persons named in the enclosed proxy card, if properly authorized, will have discretion to vote the shares they represent in accordance with their best judgment.
- Q:
- What happens if I abstain from voting on a proposal?
- A:
- If
you sign and return a proxy card or grant a proxy over the internet or by telephone but abstain from voting on the merger proposal, the merger-related
named executive officer compensation proposal or the adjournment proposal, it will have the same effect as a vote "AGAINST" the applicable proposal or proposals.
- Q:
- May I change my vote after I have mailed my signed proxy card or otherwise submitted my
vote?
- A:
- Yes. Even if you sign and return the proxy card accompanying this proxy statement/prospectus, you retain the power to revoke your proxy or change your vote. You can revoke your proxy or change your vote at any time before it is exercised by giving written notice to Carmike's Corporate Secretary at Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attn: Corporate Secretary, specifying such revocation or change in vote. You may also change your vote by delivery of a valid, later-dated proxy prior to the special meeting or by attending and voting at the special meeting.
10
- Q:
- What should I do if I already voted using the original proxy card sent with the original proxy
statement?
- A:
- Any
proxies previously delivered by a stockholder of record on the record date, including by delivery of the original proxy card, will be valid and effective
and voted in the manner set forth on the previously delivered proxy unless such stockholder revokes such proxy or changes such proxy. Such previously delivered proxies will be deemed to cover the
number of shares you own on the record date even if that number is more than or less than the number of shares you owned on May 18, 2016, the original record date for the special meeting,
returned to as the "original record date." If you held shares in "street name" through a nominee on the original record date and continue to own such shares at that nominee, and have already provided
voting instructions with respect to such shares, such shares will be voted as directed by such voting instructions and you do not need to take any action, unless you wish to revoke or change such
voting instructions. Such previously delivered voting instructions will be deemed to cover the number of shares you own on the record date, even if that number is more than or less than the number of
shares you owned on the original record date. If you held shares in "street name" through a nominee on the original record date, but have acquired shares after the original record date, and you are
the stockholder of record of those newly acquired shares, then, whether or not you previously gave a voting instruction with respect to the shares that you held on the original record date, those
newly acquired shares will not be voted unless you give a proxy with respect to those shares by completing, signing, dating and returning the enclosed proxy card, by following the instructions on the
enclosed proxy card for Internet or telephone submissions or you attend the special meeting and vote in person. You can revoke your proxy or change your vote at any time before it is exercised by
giving written notice to Carmike's Corporate Secretary at Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attn: Corporate Secretary, specifying such revocation or change in
vote. You may also change your vote by delivery of a valid, later-dated proxy prior to the special meeting or by attending and voting at the special meeting. If your shares of Carmike common stock are
held in "street name" through a nominee, and you wish to revoke or change such instructions, you should instruct your nominee how to vote, or revoke previously delivered voting instructions, in
accordance with the voting instruction form furnished by your nominee.
If you are unsure whether you have previously voted, or if you have acquired shares after the original record date and are unsure whether your original proxy card or voting instructions will apply to your newly acquired shares, you can submit your vote again by following the instructions on the enclosed proxy card or voting instruction form.
- Q:
- What does it mean if I receive more than one set of proxy materials?
- A:
- This
means that you own shares of Carmike common stock that are registered under different names. For example, you may own some shares directly as a
stockholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must complete,
sign, date and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the voting instruction cards that you receive in order to vote all of the shares
you own. Each proxy card you receive comes with its own prepaid return envelope; if you vote by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.
- Q:
- When is the merger expected to be completed?
- A:
- Carmike and AMC are working to complete the merger promptly, and expect it to be completed by the end of 2016. The merger is subject, however, to various regulatory approvals and other conditions, which are described in more detail in this proxy statement/prospectus, and it is possible
11
that factors outside the control of either company could result in the merger being completed at a later time, or not being completed at all.
- Q:
- If the merger is completed, how will I receive the merger consideration for my
shares?
- A:
- If
you are the record holder of your shares of Carmike common stock, after receiving the proper documentation from you and determining the proper allocations
of cash and stock consideration to be paid or issued to Carmike stockholders, the exchange agent will forward to you the cash and/or AMC Class A common stock to which you are entitled. If your
shares of Carmike common stock are held in "street name" by your bank, broker or other nominee, you will receive instructions from your bank, broker or other nominee as to how to submit a form of
election and how to effect the surrender of your "street name" shares in order to receive the applicable consideration for those shares. See "Terms of the Amended and Restated
Merger Agreement—Exchange of Shares in the Merger" beginning on page 114.
- Q:
- Is the merger taxable to me?
- A:
- The
exchange of shares of Carmike common stock for cash and/or shares of AMC Class A common stock pursuant to the merger will generally be a taxable
transaction for U.S. federal income tax purposes to U.S. holders (as defined in "Proposal 1—Adoption of the Amended and Restated Merger
Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy statement/prospectus). If you are a U.S. holder and your
shares of Carmike common stock are converted into the right to receive the merger consideration, you will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to
the difference, if any, between (i) the sum of the amount of any cash received, plus the fair market value (determined as of the closing date of the merger) of any shares of AMC Class A
common stock received, with respect to such block of shares of Carmike common stock and (ii) your adjusted tax basis in such block of shares of Carmike common stock. The exchange of shares of
Carmike common stock for cash and/or AMC Class A common stock pursuant to the merger will generally not result in a non-U.S. holder (as defined in "Proposal
1—Adoption of the Amended and Restated Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy
statement/prospectus) being subject to U.S. federal income tax unless the non-U.S. holder has certain connections to the United States. You should read "Proposal
1—Adoption of the Amended and Restated Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy
statement/prospectus for a more detailed discussion of the U.S. federal income tax consequences of the merger to U.S. holders and non-U.S. holders. You should also consult your tax advisor for a
complete analysis of the particular tax consequences of the merger to you, including the applicability and effect of any U.S. federal, state and local and non-U.S. tax laws.
- Q:
- What happens if the merger is not completed?
- A:
- If the amended and restated merger agreement is not adopted by the stockholders at the special meeting or if the merger is not completed for any other reason, stockholders will not receive the merger consideration or any payment for their shares of Carmike common stock in connection with the merger. Instead, Carmike common stock will continue to be listed and traded on NASDAQ. In certain circumstances, AMC or Carmike may be required to pay, a termination fee or may seek other remedies in connection with a termination of the amended and restated merger agreement, in each case, as described under "Terms of the Amended and Restated Merger Agreement—Termination Fee; Effect of Termination" beginning on page 139 of this proxy statement/prospectus.
12
- Q:
- Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my
shares?
- A:
- Yes.
In order to exercise your appraisal rights, you must follow the requirements set forth in Section 262 of the Delaware General Corporation Law,
referred to as the "DGCL". Under Delaware law, if the merger is completed, stockholders of Carmike who do not vote in favor of adopting the amended and restated merger agreement and who
meet the other requirements set forth in Section 262 of the DGCL will have the right to receive payment of the fair value of their shares of Carmike common stock as determined by the Delaware
Court of Chancery in lieu of the merger consideration. Appraisal rights will only be available to Carmike stockholders that deliver to Carmike a written demand for appraisal of their shares prior to
the taking of the vote on the merger proposal by the stockholders at the special meeting, do not vote in favor of the merger proposal, hold their shares continuously through the effective time of the
merger, do not submit their shares for payment of the merger consideration, and otherwise comply with the statutory procedures and requirements set forth in Section 262 of the DGCL, which are
summarized in this proxy statement/prospectus. Any demands delivered prior to the mailing of this proxy statement/prospectus will not be treated by Carmike as satisfying the demand requirement. If you delivered to Carmike a
written demand for appraisal of your shares prior to the mailing of this proxy statement/prospectus (including prior to the date of the amended
and restated merger agreement), you must again demand appraisal for your shares to perfect your appraisal rights. The amount determined by the Delaware Court of Chancery to be
the fair value of Carmike stock as of the effective time of the merger could be more than, the same as, or less than the merger consideration a stockholder would be entitled to receive under the terms
of the amended and restated merger agreement. A copy of Section 262 of the DGCL is attached as Annex C to this proxy statement/prospectus and a summary of Section 262 can be found
along with additional information about appraisal rights under "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Appraisal
Rights" beginning on page 104 of this proxy statement/prospectus.
- Q:
- Who will count the votes?
- A:
- The
votes will be counted by a representative of American Stock Transfer & Trust Company, who will act as the inspector of election appointed for the
special meeting.
- Q:
- Where can I find the voting results of the special meeting?
- A:
- Carmike
intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be
filed with the SEC following the special meeting. All periodic and current reports Carmike files with the SEC are publicly available when filed. See "Where Stockholders Can
Find More Information" beginning on page 164 of this proxy statement/prospectus.
- Q:
- Where can I find more information about AMC and Carmike?
- A:
- You
can find more information about AMC and Carmike in their publicly filed reports with the SEC, on AMC website www.amctheatres.com, on Carmike's website
www.carmike.com, and in "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus.
- Q:
- Who can help answer my questions about the special meeting and voting?
- A:
- If
you would like additional copies, without charge, of this proxy statement/prospectus, or if you have questions about the amended and restated merger
agreement or the merger, including the procedures for voting your shares, you should contact Innisfree M&A Incorporated, Carmike's proxy solicitor, toll-free at (888) 750-5834. Banks and
brokers may call collect at (212) 750-5833.
If your nominee holds your shares, you should also call your nominee for additional information.
13
This summary briefly summarizes material information found in this proxy statement/prospectus concerning the merger and the proposals to be voted upon at the special meeting. The proxy statement/prospectus contains a more detailed description of the terms described in this summary. You are urged to read this proxy statement/prospectus carefully, including the annexes and the documents referred to or incorporated by reference in this proxy statement/prospectus, as this summary may not contain all the information that may be important to you. Page references have been included in parentheses to direct you to the appropriate place in this proxy statement/prospectus for a more complete description of the topics presented in this summary. You may obtain the information incorporated by reference in this proxy statement/prospectus without charge by following the instructions under "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus.
Carmike Cinemas, Inc. (Page 50)
Carmike Cinemas, Inc., a Delaware corporation, is a U.S. leader in digital cinema, 3-D cinema deployments and alternative programming and is one of the nation's largest motion picture exhibitors. As of October 5, 2016, Carmike had 271 theatres with 2,917 screens in 41 states. The circuit includes 55 premium large format (PLF) auditoriums featuring state-of-the-art technology and luxurious seating, including 32 "BigDs," 21 IMAX auditoriums and two MuviXL screens. As "America's Hometown Theatre Chain" Carmike's primary focus is mid-sized communities.
Carmike's common stock is listed on the NASDAQ Global Select Market, referred to as "NASDAQ," under the symbol "CKEC."
Carmike's principal executive offices are located at 1301 First Avenue, Columbus, Georgia 31901 its telephone number is (706) 576-3400 and its internet website address is www.carmike.com. The information provided on or accessible through Carmike's website, other than securities filings that are otherwise incorporated herein by reference, is not part of this proxy statement/prospectus and is not incorporated in this proxy statement/prospectus by this or any other reference to Carmike's website provided in this proxy statement/prospectus.
Additional information about Carmike is contained in its public filings, certain of which are incorporated by reference herein. See "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus.
AMC Entertainment Holdings, Inc. (Page 50)
AMC Entertainment Holdings, Inc., a Delaware corporation, through its direct and indirect subsidiaries is principally involved in the theatrical exhibition business and owns, operates or has interests in 386 locations and 5,334 screens as of June 30, 2016, located primarily in the United States.
AMC's common stock is listed on the New York Stock Exchange, referred to as "NYSE," under the symbol "AMC."
AMC's principal executive offices are located at One AMC Way, 11500 Ash Street, Leawood KS 66211, its telephone number is (913) 213-2000 and its internet website address is www.amctheatres.com. The information provided on or accessible through AMC's website, other than securities filings that are otherwise incorporated herein by reference, is not part of this proxy statement/prospectus and is not incorporated in this proxy statement/prospectus by this or any other reference to AMC's website provided in this proxy statement/prospectus.
On July 12, 2016, AMC entered into a Share Purchase Agreement to acquire the film exhibition business of Odeon and UCI Cinemas Holdings Limited, referred to as "Odeon/UCI," for total
14
consideration of (i) cash in the amount of GBP £375 million ($478.0 million), (ii) shares of AMC Class A common stock valued at GBP £125 million ($159.3 million) and (iii) the assumption of indebtedness of approximately GBP £475.8 million ($606.5 million) as of October 5, 2016. The US Dollar amounts set forth in the preceding sentence assume a Euro/USD exchange rate of 1.1204 and a GBP/USD exchange rate of 1.2747 as of October 5, 2016. Odeon/UCI is a leading European cinema operator with 242 cinemas and 2,236 screens. Odeon/UCI operates in four major markets: the United Kingdom, Spain, Italy and Germany; and three smaller markets: Austria, Portugal, and Ireland. For the year ended December 31, 2015 and six months ended June 30, 2016, Odeon/UCI had revenues of $1,142,963,000 and $526,199,000 respectively (based on an average GBP/USD exchange rate of 1.5284 for the twelve months ended December 31, 2015 and 1.4326 for the six months ended June 30, 2016, respectively). The closing of the Share Purchase Agreement is subject to clearance by the European Commission and the UK Competition and Markets Authority.
Additional information about AMC is contained in its public filings, certain of which are incorporated by reference herein. See "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus.
Congress Merger Subsidiary, Inc. (Page 51)
Congress Merger Subsidiary, Inc., an indirect wholly owned subsidiary of AMC, is a Delaware corporation that was formed on February 29, 2016 for the sole purpose of entering into the original merger agreement, the amended and restated merger agreement and completing the transactions contemplated by the amended and restated merger agreement, including the merger. Upon the terms and subject to the conditions of the amended and restated merger agreement, Merger Sub will be merged with and into Carmike, with Carmike surviving the merger as an indirect wholly owned subsidiary of AMC.
Merger Sub's principal executive offices are located at One AMC Way, 11500 Ash Street, Leawood, KS 66211, and its telephone number is (913) 213-2000.
The proposed transaction is the acquisition of Carmike by AMC pursuant to the amended and restated merger agreement. The acquisition will be effected by the merger of Merger Sub with and into Carmike, with Carmike continuing as the surviving corporation and becoming an indirect wholly owned subsidiary of AMC.
Expected Timing of the Merger (Page 110)
Carmike and AMC are working to complete the merger promptly, and expect it to be completed by the end of 2016. The merger is subject, however, to various regulatory approvals and other conditions, which are described in more detail in this proxy statement/prospectus, and it is possible that factors outside the control of either company could result in the merger being completed at a later time, or not at all.
Effect of the Merger (Page 110)
Pursuant to the terms of the amended and restated merger agreement, if the amended and restated merger agreement is adopted by Carmike's stockholders and the other conditions to the closing are either satisfied or waived, at the effective time of the merger, Merger Sub will be merged with and into Carmike, with Carmike surviving the merger as an indirect wholly owned subsidiary of AMC. As a result of the merger, Carmike will cease to be traded on NASDAQ, the registration of Carmike common stock under the Securities Exchange Act of 1934, as amended, referred to as the
15
"Exchange Act," will be terminated and Carmike will no longer be required to file reports with the Securities and Exchange Commission, referred to as the "SEC."
At the effective time of the merger, it is expected that 34,957,483 shares of AMC Class A common stock will be issued and outstanding (including approximately 8,258,171 shares of AMC Class A common stock issued to Carmike stockholders in the merger and 5,085,780 shares of AMC Class A common stock expected to be issued in connection with the closing of the Odeon/UCI transaction, assuming the price of AMC Class A common stock calculated in accordance with the Share Purchase Agreement is $31.33 and the GBP/USD exchange rate is 1.2747, which was the exchange rate on October 5, 2016). As a result, holders of shares of Carmike common stock as of immediately prior to the closing of the merger will hold approximately 23.6% in the aggregate, of the issued and outstanding shares of AMC Class A common stock and approximately 7.5% in the aggregate, of the issued and outstanding shares of AMC Class A common stock and AMC Class B common stock immediately following the closing of the merger, as determined on a fully diluted basis.
Merger Consideration (Page 111)
If the merger is completed, each share of Carmike common stock, issued and outstanding immediately prior to the effective time of the merger (other than the shares of Carmike common stock held by Carmike as treasury stock, or owned by subsidiaries of Carmike or by AMC, Merger Sub or any of their subsidiaries, or held by stockholders who are entitled to demand and have properly demanded appraisal for such shares in accordance with, and who comply in all respects with, Section 262 of the DGCL, which shares are referred to collectively as the "excluded shares"), will be converted at the election of the holder, either (i) $33.06 in cash, without interest (such cash amount is referred to as the "cash consideration") or (ii) 1.0819 shares of AMC Class A common stock and such amount of AMC Class A common stock is referred to as the "stock consideration") and less any applicable withholding taxes (the combination of the cash consideration and the stock consideration is referred to as the "merger consideration"), subject to proration so that 70% of the total number of shares Carmike common stock issued and outstanding at the effective time of the merger (excluding any excluded shares) will be converted into cash and 30% of the Carmike shares will be converted into shares of AMC Class A common stock. Because elections are subject to proration as described above, you may receive some shares of AMC Class A common stock, rather than cash, even if you elected to receive cash with respect to all of your shares of Carmike common stock (and vice versa). In connection with the merger, you will be provided a form of election for you to elect the form of consideration that you would like to receive in the merger, subject to the proration as described above. It is important that you complete and return the form of election. If you fail to do so, the merger consideration you receive will be entirely outside of your control and will depend on the elections made by other Carmike stockholders, and you could receive all stock, all cash or a mix of stock and cash depending on the elections that are made.
No fractional shares of AMC Class A common stock will be issued in the merger. Carmike stockholders will receive cash (without interest and rounded up to the nearest whole cent) in lieu of receiving any fractional shares of Class A common stock to which any Carmike stockholder would otherwise have been entitled without interest and less any applicable withholding taxes. At or prior to the effective time of the merger, AMC will (i) make available to the exchange agent evidence of AMC Class A common stock sufficient to deliver the aggregate stock consideration, and (ii) deposit or cause to be deposited with the exchange agent sufficient funds to pay the aggregate cash consideration with the exchange agent.
Because the stock consideration was fixed at the time the amended and restated merger agreement was executed and because the market value of AMC Class A common stock will fluctuate during the pendency of the merger, Carmike stockholders cannot be sure of the actual value of the merger consideration they elect to receive compared to the value of the Carmike common stock that they are
16
exchanging. See "Risk Factors—Risks Related to the Merger." Carmike stockholders are urged to obtain current market quotations for the AMC Class A common stock when they make their elections.
Date, Time and Place (Page 52)
The special meeting will be reconvened on November 15, 2016 at 10:00 a.m., local time at the offices of King & Spalding LLP located at 1180 Peachtree Street, N.E., Atlanta, Georgia 30309.
Purpose of the Special Meeting
At the special meeting, you will be asked to consider and vote upon:
- (1)
- the
merger proposal;
- (2)
- the
merger-related named executive officer compensation proposal; and
- (3)
- the adjournment proposal.
In this proxy statement/prospectus, references to the "proposals" refer to proposals (1) to (3) listed above.
Record Date and Voting Information (Page 53)
Only Carmike stockholders who hold shares of Carmike common stock at the close of business on the record date will be entitled to vote at the special meeting. Each share of Carmike common stock outstanding on the record date will be entitled to one vote on each matter submitted to Carmike stockholders for approval at the special meeting. As of the record date, there were 24,388,587 outstanding shares of Carmike common stock.
Quorum (Page 53)
The presence in person or by proxy of the holders of record of a majority of the shares of Carmike common stock issued and outstanding and entitled to vote at the meeting is necessary and sufficient to constitute a quorum for the transaction of any business at the special meeting. As of the record date, 12,194,294 shares of Carmike common stock will be required to obtain a quorum.
Required Vote; Effect of Abstentions and Broker Non-Votes (Page 53)
Adoption of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Carmike common stock entitled to vote at the special meeting. Approval of each of the merger-related named executive officer compensation proposal and the adjournment proposal (if a quorum is present) requires the affirmative vote of the holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote at the meeting. Approval of the adjournment proposal (if no quorum is present) will require the affirmative vote of the holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote on such matter. Under Carmike's by-laws, the presiding officer of the special meeting and the Chief Executive Officer of Carmike each also have the independent authority to adjourn the special meeting regardless of the outcome of the vote on the adjournment proposal.
Abstentions will have the same effect as votes "AGAINST" the merger proposal, the merger-related named executive officer compensation proposal and the adjournment proposal.
Shares not in attendance will have no effect on the outcome of any vote on the merger-related named executive officer compensation proposal or the adjournment proposal, but will have the same effect as votes "AGAINST" the merger proposal.
17
If you hold your shares through a nominee and have not instructed and do not instruct your nominee on how you wish your shares of Carmike common stock to be voted using the voting instruction form provided by your nominee, your nominee may not vote uninstructed shares on the merger proposal, the merger-related named executive officer compensation proposal or the adjournment proposal. When a nominee is permitted to vote a client's shares on some but not all of the proposals at a meeting, the missing votes are referred to as "broker non-votes." Broker non-votes will be counted as votes "AGAINST" the merger proposal, the merger-related named executive officer compensation proposal and the adjournment proposal (if a quorum is present). Broker non-votes will have no effect on the adjournment proposal (if no quorum is present).
Voting by Stockholders (Page 54)
Any Carmike stockholder of record entitled to vote may submit a proxy by returning a signed proxy card by mail, through the internet or by telephone, or may vote in person by appearing at the special meeting. If you are a beneficial owner and hold your shares of Carmike common stock in "street name" through a nominee, you should instruct your nominee on how you wish your shares of Carmike common stock to be voted using the instructions provided by your nominee. The nominee cannot vote on these proposals without your instructions. Therefore, it is important that you cast your vote or instruct your nominee on how you wish your shares to be voted. If you are a street name holder and wish to vote the shares beneficially owned by you in person by ballot at the special meeting, you must provide a "legal proxy" from your nominee, giving you the right to vote the shares at the special meeting.
Any proxies previously delivered by a stockholder of record on the record date, including by delivery of the original proxy card, will be valid and effective and voted in the manner set forth on the previously delivered proxy unless such stockholder revokes such proxy or changes such proxy. Such previously delivered proxies will be deemed to cover the number of shares you own on the record date even if that number is more than or less than the number of shares you owned on May 18, 2016, the original record date for the special meeting. If you held shares in "street name" through a nominee on the original record date and continue to own such shares at that nominee, and have already provided voting instructions with respect to such shares, such shares will be voted as directed by such voting instructions and you do not need to take any action, unless you wish to revoke or change such voting instructions. Such previously delivered voting instructions will be deemed to cover the number of shares you own on the record date, even if that number is more than or less than the number of shares you owned on the original record date. If you held shares in "street name" through a nominee on the original record date, but have acquired shares after the original record date, and you are the stockholder of record of those newly acquired shares, then, whether or not you previously gave a voting instruction with respect to the shares that you held on the original record date, those newly acquired shares will not be voted unless you give a proxy with respect to those shares by completing, signing, dating and returning the enclosed proxy card or by following the instructions on the enclosed proxy card for internet or telephone submissions or you attend the special meeting and vote in person. If you held shares in "street name" through a nominee on the original record date, but have acquired shares in "street name" after the original record date through a different nominee, then, whether or not you previously gave a voting instruction with respect to the shares that you held on the original record date, those newly acquired shares will not be voted unless you instruct your nominee how to vote in accordance with the voting instruction form furnished by your nominee.
If you are unsure whether you have previously voted, or if you have acquired shares after the original record date and are unsure whether your original proxy card or voting instructions will apply to your newly acquired shares, you can submit your vote again by following the instructions on the enclosed proxy card or voting instruction form. Whether or not you plan to attend the special meeting, please submit your proxy to vote your shares at your earliest convenience. If you do attend the special
18
meeting and wish to vote in person, you may withdraw your proxy at that time. You can revoke your proxy or change your vote at any time before it is exercised by giving written notice to Carmike's Corporate Secretary at Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attn: Corporate Secretary, specifying such revocation or change in vote. You may also change your vote by delivery of a valid, later-dated proxy prior to the special meeting or by attending and voting at the special meeting.
If your shares of Carmike common stock are held in "street name" through a nominee, and you have not previously provided voting instructions with respect to such shares or you wish to revoke or change such instructions, you should instruct your nominee how to vote, or revoke previously delivered voting instructions, in accordance with the voting instruction form furnished by your nominee. If you fail to vote on the amended and restated merger agreement or fail to instruct your nominee on how to vote, the effect will be the same as a vote against the adoption of the amended and restated merger agreement.
Voting by Carmike's Directors and Executive Officers (Page 56)
At the close of business on the record date, Carmike directors and executive officers and their affiliates owned, in the aggregate, 589,860 shares of Carmike common stock which they are entitled to vote at the special meeting, representing approximately 2.42% of the shares of Carmike common stock outstanding on that date and entitled to vote at the special meeting. It is currently expected that Carmike's directors and executive officers will vote their shares in favor of each of the proposals, although none of them has entered into any agreement obligating them to do so.
Treatment of Stock Options and Other Stock-Based Compensation (Page 58)
At least seven days prior to the effective time of the merger, each outstanding Carmike stock option, referred to as the "stock options," whether or not vested or exercisable, will, contingent upon the consummation of the merger, become 100% vested and exercisable. Each share of Carmike common stock received in connection with the exercise of Carmike stock options will be entitled to receive the merger consideration, plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, subject to the terms of the amended and restated merger agreement. To the extent not exercised, each outstanding Carmike stock option will, at the effective time, be cancelled automatically, and Carmike will pay each holder of such cancelled Carmike stock option an amount in cash (less any applicable tax withholdings), determined by multiplying (x) the excess, if any, of $33.06 over the exercise price per share of Carmike common stock subject to such Carmike stock option by (y) the number of shares of Carmike common stock subject to such Carmike stock option. Notwithstanding the foregoing, if the per share exercise price payable with respect to a Carmike stock option exceeds $33.06, then such Carmike stock option will be cancelled without payment of any consideration with respect thereto.
In addition, immediately prior to the effective time of the merger:
- •
- each share of Carmike restricted stock that is then outstanding, referred to as the "restricted stock," whether or not vested, will,
contingent upon consummation of the merger, become 100% vested and all outstanding issuance and forfeiture conditions will be deemed 100% satisfied, and the holders of such shares will be entitled to
receive the merger consideration plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the
effective time, subject to the terms of the amended and restated merger agreement;
- •
- each award of Carmike restricted stock units that is then outstanding, referred to as the "restricted stock units," whether or not vested, will, contingent upon consummation of the
19
- •
- each award of Carmike performance shares that is then outstanding, referred to as the "performance shares," whether or not vested, or whether or not performance criteria have been achieved, will, contingent upon consummation of the merger, become 100% vested and all outstanding issuance and forfeiture conditions will be deemed 100% satisfied with respect to (1) the actual number of shares of Carmike common stock earned for each performance period completed prior to the effective time of the merger, as determined by Carmike prior to the effective time of the merger in accordance with the terms of the applicable award agreements and the Carmike stock plans in existence as of the effective date of the original merger agreement, and (2) the number of shares of Carmike common stock equal to the specified number of target shares for any performance period during which the effective time of the merger occurs and for each succeeding performance period covered by such Carmike performance shares, and the holders of such shares will be entitled to receive the merger consideration plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, in accordance with the amended and restated merger agreement.
merger, become 100% vested and all outstanding issuance and forfeiture conditions will be deemed 100% satisfied, and Carmike will with respect to the holder of any such Carmike restricted stock units (1) issue the number of shares of Carmike common stock underlying such Carmike restricted stock units, plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, which shares will be entitled to receive the merger consideration in accordance with the amended and restated merger agreement, and (2) pay in cash all dividend equivalents, if any, accrued but unpaid as of the effective time with respect to the number of shares of Carmike common stock underlying such Carmike restricted stock units; and
Listing of AMC Class A Common Stock: Delisting and Deregistration of Carmike Common Stock (Page 99)
Shares of AMC Class A common stock are quoted on the NYSE under the symbol "AMC." It is a condition to the completion of the merger that the shares of AMC Class A common stock to be issued to Carmike stockholders pursuant to the merger be authorized for listing on the NYSE, at the effective time of the merger, subject to official notice of issuance.
Upon completion of the merger, Carmike will remove its common stock from listing on NASDAQ and price quotations in the public market will no longer be available for Carmike common stock, and the registration of Carmike common stock under the Exchange Act will be terminated.
Recommendations of Carmike Board of Directors (Page 52)
After considering various reasons to approve the amended and restated merger agreement, as well as certain countervailing factors, the Carmike Board members unanimously determined that the amended and restated merger agreement and transactions contemplated thereby, including the merger, are in the best interests of Carmike's stockholders and approved, adopted and declared advisable, the amended and restated merger agreement and the merger. Certain factors considered by the Carmike Board in reaching its decision to approve the amended and restated merger agreement and the merger can be found in "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Carmike's Reasons for the Merger" beginning on page 72 of this proxy statement/prospectus.
The Carmike Board of Directors recommends that Carmike stockholders vote:
- •
- "FOR" the merger proposal, approving the transactions contemplated thereby, including the merger;
20
- •
- "FOR" the merger-related named executive officer compensation proposal;
and
- •
- "FOR" the adjournment proposal.
Opinion of Carmike's Financial Advisor (Page 78 and Annex B)
Pursuant to an engagement letter dated February 22, 2016, as amended July 19, 2016, Carmike retained J.P. Morgan Securities LLC, referred to as "J.P. Morgan," as its financial advisor in connection with the merger.
At the meeting of the Carmike Board on July 24, 2016, J.P. Morgan rendered its oral opinion to the Carmike Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the aggregate merger consideration to be paid to holders of Carmike's common stock in the merger was fair, from a financial point of view, to such stockholders. J.P. Morgan confirmed its July 24, 2016 oral opinion by delivering its written opinion to the Carmike Board, dated July 24, 2016, that, as of such date, the aggregate merger consideration to be paid to Carmike's stockholders in the merger was fair, from a financial point of view, to such stockholders.
The full text of the written opinion of J.P. Morgan dated July 24, 2016, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Carmike's stockholders are urged to read the opinion in its entirety. J.P. Morgan's written opinion was addressed to the Carmike Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the aggregate merger consideration to be paid in the merger and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any other class of securities, creditors or other constituencies of Carmike or as to the underlying decision by Carmike to engage in the merger. The issuance of J.P. Morgan's opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of Carmike as to how such stockholder should vote with respect to the merger or any other matter.
AMC's Reasons for the Merger (Page 71)
The AMC Board determined, after careful consideration of the factors described under "Proposal 1—Adoption of the Amended and Restated Merger Agreement—AMC's Reasons for the Merger," that the amended and restated merger agreement and the transactions contemplated thereby, including the merger, are advisable and fair to AMC and in the best interests of AMC and its stockholders.
Interests of Certain Persons in the Merger (Page 86)
In considering the recommendation of the Carmike Board that you vote to adopt the amended and restated merger agreement, you should be aware that certain Carmike directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of Carmike's stockholders generally. These interests include, among others:
- •
- the amended and restated merger agreement provides for accelerated vesting of all outstanding Carmike equity awards upon the
consummation of the merger. Unexercised Options as of the effective date of the merger will be cashed out, and other equity awards shall be entitled to receive the merger consideration;
- •
- certain executive officers of Carmike are entitled to separation benefits in the event that, in connection with or following the merger, the executive is terminated without cause, or the executive terminates for "good reason" (with the amended and restated merger agreement
21
- •
- Carmike's directors and executive officers are entitled to continued indemnification and insurance coverage following completion of
the merger under Carmike's organizational documents, indemnification agreements and the amended and restated merger agreement; and
- •
- the amended and restated merger agreement requires AMC to provide employees of Carmike who continue as employees of AMC or any of its subsidiaries (including Carmike) benefits that are no less favorable in the aggregate than the level of such employee benefits provided to such employees as of the date of the amended and restated merger agreement, for a period of twelve months following the closing of the merger.
acknowledging that, as a result of the merger, certain named executive officers will be deemed to have experienced a "good reason" event);
The Carmike Board was aware of the different or additional interests set forth in this proxy statement/prospectus and considered such interests along with other matters in approving the amended and restated merger agreement and the transactions contemplated by the amended and restated merger agreement, including the merger.
Financing of the Merger (Page 86)
In connection with the entry into the amended and restated merger agreement, AMC entered into a second amended and restated debt commitment letter, referred to as the "debt commitment letter," with Citigroup Global Markets Inc., Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Credit Suisse AG, Cayman Islands Branch, Credit Suisse Securities (USA) LLC, HSBC Bank USA, N.A., and HSBC Securities (USA) Inc., referred to collectively as the "Commitment Parties," on July 24, 2016, pursuant to which the Commitment Parties have committed to arrange and provide AMC with (1) a senior secured incremental term loan in an aggregate amount of up to $225.0 million and (2) a senior subordinated bridge loan in an aggregate amount of up to $300.0 million, in each case, on the terms and subject to the conditions set forth in the debt commitment letter. It is expected that AMC will seek long-term debt and/or equity financing in lieu of drawings under the senior subordinated bridge loan, subject to market and other conditions. The merger is not subject to a financing condition.
No Solicitation of Acquisition Proposals (Page 124)
Carmike has agreed not to (1) solicit proposals relating to certain alternative transactions or (2) enter into discussions or negotiations or provide non-public information in connection with any proposal for an alternative transaction from a third party, subject to certain exceptions to permit Carmike's Board of Directors to comply with its fiduciary duties.
Changes in Carmike Board Recommendation (Page 124)
The Carmike Board has agreed not to make an adverse change to its recommendation to Carmike stockholders to approve the merger proposal. However, if, prior to the approval and adoption of the amended and restated merger agreement by Carmike's stockholders, (1) an intervening event (as defined in "Terms of the Amended and Restated Merger Agreement—No Solicitation of Acquisition Proposals; Changes in Board Recommendation" beginning on page 124 of this proxy statement/prospectus) occurs, and the Carmike Board determines in good faith, after consultation with its financial advisor and outside legal counsel, that any failure to take such action would be inconsistent with its fiduciary duties under applicable law, or (2) Carmike receives an acquisition proposal (that did not result from any material breach of Carmike's non-solicitation obligations under the amended and restated merger agreement) that the Carmike Board determines in good faith, after consultation with its financial advisor and outside legal counsel, constitutes a superior proposal, then the Carmike Board may make an adverse recommendation change (as defined in "Terms of the Amended and Restated
22
Merger Agreement—No Solicitation of Acquisition Proposals; Changes in Board Recommendation" beginning on page 124 of this proxy statement/prospectus) and, in the case of a superior proposal, authorize Carmike to execute acquisition proposal documentation and concurrently terminate the amended and restated merger agreement, subject to the payment of a termination fee by Carmike to AMC as described in "Terms of the Amended and Restated Merger Agreement—Termination Fee; Effect of Termination" beginning on page 139 of this proxy statement/prospectus.
Conditions to Completion of the Merger (Page 134)
The completion of the merger is subject to the satisfaction or waiver of various customary closing conditions, including, among others:
- •
- the requisite approval of Carmike stockholders;
- •
- the shares of AMC Class A common stock to be issued to the holders of Carmike common stock upon consummation of the merger
having been authorized for listing on the NYSE, subject to official notice of issuance;
- •
- this registration statement becoming and remaining effective under the Securities Act of 1933, as amended, referred to as the
"Securities Act");
- •
- the absence of any pending proceeding brought by a governmental authority in the United States pursuant to certain antitrust laws that
challenges or seeks to prevent, enjoin, alter or delay the merger or any of the other transactions contemplated by the amended and restated merger agreement;
- •
- the absence of any order or injunction issued by any court or governmental authority in the United States preventing the consummation
of the merger;
- •
- the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, referred to as the "HSR Act;"
- •
- the termination or expiration of any agreement with a governmental authority with respect to the HSR Act not to close the merger.
AMC's obligation to complete the merger is also conditioned on:
- •
- the absence of a material adverse effect with respect to Carmike, as defined in "Terms of the Amended and
Restated Merger Agreement—Representations and Warranties" on page 116 of this proxy statement/prospectus; and
- •
- the absence of holders of 20% or more of the outstanding shares of Carmike common stock exercising dissenters' rights.
Carmike's obligation to complete the merger is subject to the absence of a material adverse effect with respect to AMC, as described in "Terms of the Amended and Restated Merger Agreement—Representations and Warranties" on page 116 of this proxy statement/prospectus.
In addition, Carmike's and AMC's obligations to complete the merger are subject to certain other conditions, including (i) subject to the standards set forth in the amended and restated merger agreement, the accuracy of the representations and warranties of the other party and (ii) compliance of the other party with its covenants in all material respects. The merger is not subject to a financing condition.
Termination of the Amended and Restated Merger Agreement (Page 137)
The amended and restated merger agreement may be terminated prior to the effective time of the merger, notwithstanding the adoption of the amended and restated merger agreement by Carmike
23
stockholders, under specified circumstances. See "Terms of the Amended and Restated Merger Agreement—Termination of the Amended and Restated Merger Agreement," beginning on page 136 of this proxy statement/prospectus, for more information about the circumstances in which either Carmike or AMC could terminate the amended and restated merger agreement.
The amended and restated merger agreement provides that Carmike or AMC, as applicable, will pay the other a cash termination fee in specified circumstances. Other than as provided above or as described below in "Terms of the Amended and Restated Merger Agreement—Fees and Expenses" beginning on page 139 of this proxy statement/prospectus, all fees and expenses incurred by the parties are to be paid by the party that has incurred the fees and expenses.
Specific Performance (Page 140)
The amended and restated merger agreement generally provides that the parties will be entitled to an injunction to prevent breaches of the amended and restated merger agreement or to specifically enforce the performance of the terms and provisions contained in the amended and restated merger agreement, including the consummation of the merger and the payment of the merger consideration.
Accounting Treatment (Page 99)
AMC will account for the merger using the acquisition method of accounting, as prescribed in Accounting Standards Codification 805, "Business Combinations," under U.S. generally accepted accounting principles, which are referred to as GAAP.
Material U.S. Federal Income Tax Consequences of the Merger (Page 100)
The exchange of shares of Carmike common stock for cash and/or shares of AMC Class A common stock pursuant to the merger will generally be a taxable transaction for U.S. federal income tax purposes to U.S. holders (as defined in "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy statement/prospectus). If you are a U.S. holder and your shares of Carmike common stock are converted into the right to receive the merger consideration, you will generally recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (i) the sum of the amount of any cash received, plus the fair market value (determined as of the closing date of the merger) of any shares of AMC Class A common stock received, with respect to such block of shares of Carmike common stock and (ii) your adjusted tax basis in such block of shares of Carmike common stock. The exchange of shares of Carmike common stock for cash and/or shares of AMC Class A common stock pursuant to the merger will generally not result in a non-U.S. holder (as defined in "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy statement/prospectus) being subject to U.S. federal income tax unless the non-U.S. holder has certain connections to the United States. You should also consult with your tax advisor for a complete analysis of the particular tax consequences of the merger to you, including the applicability and effect of any U.S. federal, state and local and non-U.S. tax laws.
The merger is subject to the expiration or termination of the applicable waiting periods under the HSR Act. Each party has agreed to use reasonable best efforts to cause the merger to be consummated and to obtain antitrust approval. To the extent required to obtain such approvals, AMC has agreed to offer, negotiate and agree to divestitures and other restraints with respect to Carmike's, AMC's and
24
their respective affiliates' businesses, services or assets, except that AMC will not be required to agree to a divestiture, license or hold separate of (i) Carmike's, AMC's or their respective affiliates' theatres that would result in a loss of theatre-level cash flows in excess of $25 million in the aggregate, subject to certain limited exceptions or (ii) non-theatre assets with an aggregate net book value in excess of $20 million. On April 12, 2016, Carmike and AMC each filed their respective Notification and Report forms with the Antitrust Division of the Department of Justice, referred to as the "DOJ," and the Federal Trade Commission, referred to as the "FTC." On May 12, 2016, the DOJ issued a request for additional information under the HSR Act, referred to as a "Second Request." The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after Carmike and AMC have substantially complied with this request, unless that period is extended voluntarily by the parties or terminated sooner by the DOJ. Carmike and AMC are continuing to cooperate with the DOJ in its review of the transaction.
At any time before the effective time of the merger, the FTC, the DOJ, or others could take action under antitrust laws with respect to the merger, including seeking to enjoin the completion of the merger, to rescind the merger or to conditionally approve the merger upon the divestiture of assets, or to impose restrictions on the operations of Carmike or AMC following the completion of the merger. State attorneys general have notified Carmike and AMC that they will be investigating the competitive effects of the merger. In addition, other state antitrust authorities and private parties in certain circumstances may bring legal action under the antitrust laws seeking to enjoin the merger or seeking conditions to the completion of the merger. There can be no assurance that the merger will not be challenged on antitrust grounds or, if such a challenge is made, that the challenge will not be successful.
All fees and expenses incurred in connection with the amended and restated merger agreement, the merger and the other transactions contemplated by the amended and restated merger agreement will be paid by the party incurring such fees or expenses, whether or not the merger or any of the other transactions contemplated by the amended and restated merger agreement are completed, with certain exceptions expressly set forth in the amended and restated merger agreement. These exceptions include reimbursement by AMC of out-of-pocket expenses incurred by Carmike in connection with Carmike's cooperating with AMC's obtaining financing.
Comparison of Rights of AMC Stockholders and Carmike Stockholders (Page 148)
The rights of Carmike stockholders are currently governed by Carmike's certificate of incorporation, bylaws and the DGCL. Following the merger, Carmike stockholders who receive AMC Class A common stock will become AMC stockholders, and their rights will be governed by AMC's amended and restated certificate of incorporation and amended and restated bylaws and will continue to be governed by the DGCL. See "Comparison of Rights of AMC and Carmike Stockholders," beginning on page 147 of this proxy statement/prospectus, for more information about the respective governing documents of Carmike and AMC.
Comparative Market Price Information (Page 35)
The following table presents the closing prices of AMC Class A common stock on the NYSE and Carmike common stock on the NASDAQ on July 22, 2016, the last trading day before the public announcement of the merger, and October 5, 2016, the most recent practicable trading day before the filing of this proxy statement/prospectus. The table also presents the approximate equivalent value of the stock consideration on those dates, calculated by multiplying the closing price of AMC Class A common stock ending on those dates by 1.0819 representing the approximate per share value of the stock consideration that a Carmike stockholder will be entitled to receive, in exchange for each share
25
of Carmike common stock held by such stockholder at the effective time of the merger, assuming such stockholder elects to receive, or receives as a result of proration, the stock consideration for such share.
| |
AMC Class A Common Stock (Close) |
Carmike Common Stock (Close) |
Equivalent Per Share Value |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
July 22, 2016 |
$ | 30.60 | $ | 31.13 | $ | 33.11 | ||||
October 5, 2016 |
$ | 31.94 | $ | 33.01 | $ | 34.56 | ||||
The market prices of shares of AMC Class A common stock and Carmike common stock fluctuate, and the value of the stock consideration will fluctuate with the market price of the AMC Class A common stock. As a result, you are urged to obtain current market quotations of AMC Class A common stock before making any decision with respect to the merger proposal.
Litigation Related to the Merger (Page 99)
On April 25, 2016 and May 10, 2016, two putative class action complaints were filed in the United States District Court for the Middle District of Georgia, Columbus Division, referred to as the "Court," against Carmike's directors, AMC, and Merger Sub arising from the merger: Solak v. Passman, et al., C.A. No. 4:16-cv-154 (CDL), referred to as the "Solak Action," and Baskette v. Fleming, et al., C.A. No. 4:16-cv-170 (CDL), referred to as the "Baskette Action," and, together with the Solak Action, the "Actions." The plaintiffs in the Actions, certain purported holders of Carmike's common stock referred to as the "Plaintiffs," allege that the preliminary proxy statement filed by Carmike on March 31, 2016 with the SEC in connection with the original merger agreement contained false and misleading statements and omitted material information in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder, and further that the director defendants are personally liable for those alleged misstatements and omissions under Section 20(a) of the Exchange Act. Plaintiffs also allege that the director defendants breached their fiduciary duties owed to the public stockholders of Carmike in connection with the merger and that AMC and Merger Sub aided and abetted those breaches. The Actions seek, among other things, to enjoin the merger until the alleged Exchange Act violations and breaches of fiduciary duties are remedied, to rescind the merger agreement or any terms thereof to the extent such agreement or terms have already been implemented, and an award of attorneys' and experts' fees and costs. In addition, the Baskette Action seeks an accounting and award of damages.
On June 10, 2016, the Court consolidated the Actions into a single action: In re Carmike Cinemas, Inc. Shareholder Litigation, Consolidated C.A. No. 4:16-cv-154 (CDL), referred to as the "Consolidated Action." On June 14, 2016, the Court denied Plaintiffs' request for an order temporarily restraining the merger and for expedited discovery in support of a motion to preliminarily enjoin the merger. Following that ruling, all proceedings in the Consolidated Action were temporarily stayed pending the close of the merger. Although it is not possible to predict the outcome of litigation matters with certainty, Carmike, AMC and Merger Sub believe that the claims raised in the Consolidated Action are without merit and intend to defend against them vigorously.
Appraisal Rights (Page 104 and Annex C)
Under Delaware law, you are entitled to appraisal rights in connection with the merger, in lieu of the merger consideration offered by AMC.
If you comply with the requirements of Section 262 of the DGCL, you will have the right under Delaware law to receive, in lieu of the merger consideration, the fair value of your shares of Carmike common stock as determined by the Delaware Court of Chancery. The amount determined by the Delaware Court of Chancery to be the fair value of Carmike common stock as of the effective time of the merger could be more than, the same as or less than the merger consideration a stockholder would
26
be entitled to receive under the terms of the amended and restated merger agreement. Your appraisal rights are subject to a number of restrictions and technical requirements. Generally, in order to demand and perfect your appraisal rights, you must comply with the procedures set forth in Section 262, including but not limited to the following:
- •
- prior to the vote on the merger proposal by the stockholders at the special meeting, you must deliver to Carmike a written demand for
appraisal of your shares that complies with the applicable statutory requirements;
- •
- you must not vote "FOR" the merger proposal, either by proxy or in person, at the special meeting;
- •
- you must continue to hold your shares through the effective time of the merger;
- •
- if the amended and restated merger agreement is adopted at the special meeting, you must not submit your shares for payment of the
merger consideration; and
- •
- within 120 days after the effective time of the merger, you must file a petition in the Court of Chancery of the State of Delaware, requesting a determination of the fair value of your shares of Carmike common stock as of the effective time of the merger.
Merely voting against the merger proposal will not perfect your appraisal rights. If you hold your shares in "street name," you must instruct your nominee to take action in strict compliance with the DGCL to exercise your appraisal rights. Any demands delivered prior to the mailing of this proxy statement/prospectus will not be treated by Carmike as satisfying the demand requirement. If you delivered to Carmike a written demand for appraisal of your shares prior to the mailing of this proxy statement/prospectus (including prior to the date of the amended and restated merger agreement), you must again demand appraisal for your shares to perfect your appraisal rights. Requirements under Delaware law for exercising appraisal rights are described in further detail under "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Appraisal Rights" beginning on page 104 of this proxy statement/prospectus. Section 262 regarding appraisal rights available to stockholders of Delaware corporations in certain mergers and consolidations is reproduced and attached as Annex C to this proxy statement/prospectus. If you wish to avail yourself of your appraisal rights, you should consider consulting your legal advisor.
Summary of Risk Factors (Page 39)
You should consider carefully all of the risk factors together with all of the other information included in this proxy statement/prospectus before deciding how to vote.
Your cooperation in voting your shares is greatly appreciated. If you have any questions about the special meeting or the merger after reading this proxy statement/prospectus, you may contact Innisfree M&A Incorporated, Carmike's proxy solicitor, toll-free at (888) 750-5834. Banks and brokers may call collect at (212) 750-5833.
Neither the SEC nor any state securities regulatory agency has approved or disapproved of the transactions described in this proxy statement/prospectus, including the merger or the securities to be issued pursuant to the merger under this proxy statement/prospectus, or determined if the information contained in this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
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SELECTED HISTORICAL FINANCIAL DATA OF AMC
The following tables set forth selected historical financial and operating data for AMC. The following selected financial data of AMC for each of the five years ended December 31, 2015 have been derived from AMC's audited consolidated financial statements. The financial data for the six month periods ended June 30, 2016 and 2015 have been derived from the unaudited financial statements of AMC and the unaudited financial statements include all adjustments, consisting of normal recurring accruals, which AMC considers necessary for a fair presentation of the financial position and the results of operations for these periods. The selected historical consolidated financial data provide only a summary and are not necessarily indicative of the results of future operations of AMC, and should be read in conjunction with the audited consolidated financial statements and notes thereto, other financial information and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in AMC's Annual Report on Form 10-K for the year ended December 31, 2015, AMC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 and other information that AMC has filed with the SEC and incorporated by reference into this proxy statement/prospectus. See "Where Stockholders Can Find More Information" beginning on page 164.
| |
Years Ended(1) | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share and operating data) |
12 Months Ended December 31, 2015 (Successor) |
12 Months Ended December 31, 2014 (Successor) |
12 Months Ended December 31, 2013 (Successor) |
From Inception August 31, 2012 through December 31, 2012 (Successor) |
|
March 30, 2012 through August 30, 2012 (Predecessor) |
52 Weeks Ended March 29, 2012 (Predecessor) |
||||||||||||||
Statement of Operations Data: |
|||||||||||||||||||||
Revenues: |
|||||||||||||||||||||
Admissions |
$ | 1,892,037 | $ | 1,765,388 | $ | 1,847,327 | $ | 548,632 | $ | 816,031 | $ | 1,721,295 | |||||||||
Food and beverage |
910,086 | 797,735 | 786,912 | 229,739 | 342,130 | 689,680 | |||||||||||||||
Other revenue |
144,777 | 132,267 | 115,189 | 33,121 | 47,911 | 111,002 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Total revenues |
2,946,900 | 2,695,390 | 2,749,428 | 811,492 | 1,206,072 | 2,521,977 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Operating Costs and Expenses: |
|||||||||||||||||||||
Film exhibition costs |
1,021,457 | 934,246 | 976,912 | 291,561 | 436,539 | 916,054 | |||||||||||||||
Food and beverage costs |
128,569 | 111,991 | 107,325 | 30,545 | 47,326 | 93,581 | |||||||||||||||
Operating expense |
795,722 | 733,338 | 726,641 | 230,434 | 297,328 | 696,783 | |||||||||||||||
Rent |
467,822 | 455,239 | 451,828 | 143,374 | 189,086 | 445,326 | |||||||||||||||
General and administrative: |
|||||||||||||||||||||
Merger, acquisition and transactions costs |
3,398 | 1,161 | 2,883 | 3,366 | 4,417 | 3,958 | |||||||||||||||
Management fee |
— | — | — | — | 2,500 | 5,000 | |||||||||||||||
Other(2) |
58,212 | 64,873 | 97,288 | 29,110 | 27,023 | 51,495 | |||||||||||||||
Depreciation and amortization |
232,961 | 216,321 | 197,537 | 71,633 | 80,971 | 212,817 | |||||||||||||||
Impairment of long-lived assets |
1,702 | 3,149 | — | — | — | 285 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Operating costs and expenses |
2,709,843 | 2,520,318 | 2,560,414 | 800,023 | 1,085,190 | 2,425,299 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Operating income |
237,057 | 175,072 | 189,014 | 11,469 | 120,882 | 96,678 | |||||||||||||||
Other expense (income)(3) |
10,684 | (8,344 | ) | (1,415 | ) | 49 | 960 | 1,965 | |||||||||||||
Interest expense: |
|||||||||||||||||||||
Corporate borrowings |
96,857 | 111,072 | 129,963 | 45,259 | 67,614 | 172,159 | |||||||||||||||
Capital and financing lease obligations |
9,231 | 9,867 | 10,264 | 1,873 | 2,390 | 5,968 | |||||||||||||||
Equity in (earnings) losses of non-consolidated entities |
(37,131 | ) | (26,615 | ) | (47,435 | ) | 2,480 | (7,545 | ) | (12,559 | ) | ||||||||||
Investment expense (income)(4) |
(6,115 | ) | (8,145 | ) | (2,084 | ) | 290 | (41 | ) | 17,619 | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Earnings (loss) from continuing operations before income taxes |
163,531 | 97,237 | 99,721 | (38,482 | ) | 57,504 | (88,474 | ) | |||||||||||||
Income tax provision (benefit)(5) |
59,675 | 33,470 | (263,383 | ) | 3,500 | 2,500 | 2,015 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Earnings (loss) from continuing operation |
103,856 | 63,767 | 363,104 | (41,982 | ) | 55,004 | (90,489 | ) | |||||||||||||
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| |
Years Ended(1) | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share and operating data) |
12 Months Ended December 31, 2015 (Successor) |
12 Months Ended December 31, 2014 (Successor) |
12 Months Ended December 31, 2013 (Successor) |
From Inception August 31, 2012 through December 31, 2012 (Successor) |
|
March 30, 2012 through August 30, 2012 (Predecessor) |
52 Weeks Ended March 29, 2012 (Predecessor) |
||||||||||||||
Gain (loss) from discontinued operations, net of income tax provision(6) |
— | 313 | 1,296 | (688 | ) | 35,153 | (3,609 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Net earnings (loss) |
$ | 103,856 | $ | 64,080 | $ | 364,400 | $ | (42,670 | ) | $ | 90,157 | $ | (94,098 | ) | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Basic earnings (loss) per share: |
|||||||||||||||||||||
Earnings (loss) from continuing operations |
$ | 1.06 | $ | 0.65 | $ | 4.74 | $ | (0.56 | ) | $ | 0.87 | $ | (1.43 | ) | |||||||
Gain (loss) from discontinued operations |
— | 0.01 | 0.02 | (0.01 | ) | 0.55 | (0.06 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Basic earnings (loss) per share |
$ | 1.06 | $ | 0.66 | $ | 4.76 | $ | (0.57 | ) | $ | 1.42 | $ | (1.49 | ) | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Average shares outstanding—Basic |
97,963 | 97,506 | 76,527 | 74,988 | 63,335 | 63,335 | |||||||||||||||
Diluted earnings (loss) per share: |
|||||||||||||||||||||
Earnings (loss) from continuing operations |
$ | 1.06 | $ | 0.65 | $ | 4.74 | $ | (0.56 | ) | $ | 0.86 | $ | (1.43 | ) | |||||||
Gain (loss) from discontinued operations |
— | 0.01 | 0.02 | (0.01 | ) | 0.55 | (0.06 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Diluted earnings (loss) per share |
$ | 1.06 | $ | 0.66 | $ | 4.76 | $ | (0.57 | ) | $ | 1.41 | $ | (1.49 | ) | |||||||
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Average shares outstanding—Diluted |
98,029 | 97,700 | 76,527 | 74,988 | 63,715 | 63,335 | |||||||||||||||
Balance Sheet Data (at period end): |
|||||||||||||||||||||
Cash and equivalents |
$ | 211,250 | $ | 218,206 | $ | 546,454 | $ | 133,071 | $ | 277,605 | |||||||||||
Corporate borrowings(7) |
1,912,793 | 1,782,441 | 2,076,889 | 2,078,675 | 2,115,449 | ||||||||||||||||
Other long-term liabilities |
462,626 | 419,717 | 370,946 | 433,151 | 426,829 | ||||||||||||||||
Capital and financing lease obligations |
101,864 | 109,258 | 116,199 | 122,645 | 62,220 | ||||||||||||||||
Stockholder's equity |
1,538,703 | 1,512,732 | 1,507,470 | 766,774 | 157,601 | ||||||||||||||||
Total assets(7) |
5,088,317 | 4,755,168 | 5,044,802 | 4,273,838 | 3,609,182 | ||||||||||||||||
Other Data: |
|||||||||||||||||||||
Net cash provided by operating activities |
$ | 467,557 | $ | 297,302 | $ | 357,342 | $ | 73,892 | $ | 76,372 | $ | 137,029 | |||||||||
Capital expenditures |
(333,423 | ) | (270,734 | ) | (260,823 | ) | (72,774 | ) | (40,116 | ) | (139,359 | ) | |||||||||
Screen additions |
23 | 29 | 12 | — | — | 12 | |||||||||||||||
Screen acquisitions |
410 | 36 | 37 | 166 | — | — | |||||||||||||||
Screen dispositions |
14 | 33 | 29 | 15 | 31 | 106 | |||||||||||||||
Construction openings (closures), net |
60 | (48 | ) | (32 | ) | 18 | (18 | ) | — | ||||||||||||
Average screens—continuing operations(8) |
4,933 | 4,871 | 4,859 | 4,732 | 4,742 | 4,811 | |||||||||||||||
Number of screens operated |
5,426 | 4,947 | 4,963 | 4,975 | 4,806 | 4,855 | |||||||||||||||
Number of theatres operated |
387 | 346 | 343 | 342 | 331 | 336 | |||||||||||||||
Screens per theatre |
14.0 | 14.3 | 14.4 | 14.5 | 14.5 | 14.4 | |||||||||||||||
Attendance (in thousands)—continuing operations(8) |
196,902 | 187,241 | 199,270 | 60,336 | 90,616 | 194,205 | |||||||||||||||
- (1)
- On
November 15, 2012, AMC announced it had changed its fiscal year to a calendar year so that the calendar year shall begin on
January 1st and end on December 31st of each year. Prior to the change, fiscal years refer to the fifty-two weeks, and in some cases fifty-three weeks, ending on the
Thursday closest to the last day of March.
On August 30, 2012, Dalian Wanda Group Co., Ltd, referred to as "Wanda," acquired AMC through a merger between AMC and Wanda Film Exhibition Co. Ltd., referred to as "Wanda Merger Subsidiary," a wholly-owned indirect subsidiary of Wanda, whereby Wanda merger subsidiary merged with and into AMC with AMC continuing as the surviving corporation and as a then wholly-owned indirect subsidiary of Wanda, referred to as the "AMC merger." Prior to the AMC merger, AMC was privately owned by a group of private equity investors and related funds.
In connection with the change of control due to the AMC merger, AMC's assets and liabilities were adjusted to fair value on the closing date of the AMC merger by application of "push down" accounting. As a result of the application of "push down" accounting in connection with the AMC merger, the AMC financial statement presentations herein distinguish between a predecessor period, referred to as the "Predecessor," for periods prior to the AMC merger, and a successor period, referred to as the "Successor," for periods subsequent to the AMC merger. The Successor applied "push down"
29
accounting and its financial statements reflect a new basis of accounting that is based on the fair value of assets acquired and liabilities assumed as of the merger date. The selected financial data presented herein are those of Successor from its inception on August 31, 2012 through December 31, 2015, and those of Predecessor for all periods prior to the AMC merger date. As a result of the application of "push down" accounting at the time of the AMC merger, the selected financial data presented herein for the Predecessor period and for the Successor period are presented on different bases and are, therefore, not comparable.
- (2)
- During
the twelve months ended December 31, 2015, other general and administrative expense included the annual incentive compensation expense of
$14,759,000 and stock-based compensation expense of $10,480,000. During the twelve months ended December 31, 2014, other general and administrative expense included the annual incentive
compensation expense of $13,327,000 and stock-based compensation expense of $11,293,000. During the twelve months ended December 31, 2013, other general and administrative expense included both
the annual incentive compensation expense of $19,563,000 and the management profit sharing plan expense of $11,300,000 related to improvements in net earnings, an IPO stock award of $12,000,000 to
certain members of management, and early retirement and severance expense of $3,279,000. During the period of August 31, 2012 through December 31, 2012, other general and administrative
expense included both the annual incentive compensation expense of $11,733,000 and the management profit sharing plan expense of $2,554,000 related to improvements in net earnings. Annual incentive
plan compensation adopted by the successor reflects a full calendar year 2012. Other general and administrative expense for the fifty-two weeks ended March 29, 2012 included annual incentive
compensation expense of $8,642,000.
- (3)
- During
the twelve months ended December 31, 2015, AMC Entertainment, Inc. (a former wholly owned subsidiary of AMC) recorded a loss on
extinguishment related to the redemption of the Notes due 2020 of approximately $9,318,000 and a loss on the modification of the Senior Secured Credit Facility of $1,366,000. During the twelve months
ended December 31, 2014, AMC Entertainment, Inc. redeemed its Notes due 2019 resulting in a net gain of $8,386,000.
- (4)
- Investment
expense (income) includes an impairment loss of $1,370,000 and $17,751,000 during the twelve months ended December 31, 2013 and the
fifty-two weeks ended March 29, 2012, respectively, related to AMC's investment in a marketable equity security.
Prior to the date of the AMC merger on August 30, 2012, distributions received under the tax receivable agreement from NCM, Inc. were recorded as additional proceeds received in a similar fashion to the receipt of excess cash distributions from NCM, Inc. Following the date of the AMC merger, the AMC recorded an intangible asset of $20,900,000 as the fair value of the tax receivable agreement. The tax receivable agreement intangible asset is amortized on a straight-line basis against investment income over the remaining life of the Amended and Restated Exhibitor Services Agreement dated as of February 13, 2007 and Amended and Restated as of December 26, 2013, by and between National CineMedia, LLC and American Multi-Cinema, Inc. and cash proceeds from the tax receivable agreement are recorded to investment income.
- (5)
- During
the twelve months ended December 31, 2013, AMC reversed its recorded valuation allowance for deferred tax assets. AMC generated sufficient
earnings in the United States federal and state tax jurisdictions where it had recorded valuation allowances to conclude that it did not need valuation allowances in these tax jurisdictions. This
reversal is reflected as a non-cash income tax benefit recorded during the twelve months ended December 31, 2013. See Note 9—Income Taxes to the Consolidated Financial
Statements under Part II Item 8 of AMC's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, incorporated by reference herein.
- (6)
- All
fiscal years presented include gains and losses from discontinued operations related to seven theatres in Canada and one theatre in the UK that were
sold or closed in the transition period ended December 31, 2012. During the period of March 30, 2012 through August 30, 2012, AMC recorded gains, net of lease termination expense,
on the disposition of the seven Canada theatres and the one United Kingdom theatre of approximately $39,382,000, primarily due to the write-off of long-term lease liabilities extinguished in
connection with the sales and closure. During the twelve months ended December 31, 2013, AMC received $4,666,000 for a sales price adjustment from the sale of theatres located in Canada. The
gain from discontinued operations during the twelve months ended December 31, 2013, was partially offset by income taxes, legal and professional fees, and contractual repairs and maintenance
expenses.
- (7)
- The Company adopted the provisions of Accounting Standards Update ("ASU") No. 2015-03 and 2015-15, Interest-Imputation of Interest (Subtopic 835-30) as of the beginning of 2016 on a retrospective basis. As a result of the adoption of ASU No. 2015-03 and ASU No. 2015-15 during the first quarter of 2016, amounts previously reported in Form 10-K for the year ended December 31, 2015 and in Form 10-Q for the period ended June 30, 2015 have been reclassified to conform with the adoption. The Company continues to defer and present its debt issuance costs related to its line-of-credit arrangement as an asset regardless of whether there are any outstanding borrowings on the line-of-credit arrangement as provided in ASU No. 2015-15. The reclassification of debt issuance costs for term loans and senior subordinated notes from other long-term assets to corporate borrowings as of December 31, 2015, June 30, 2015, December 31, 2014, December 31, 2013, December 31, 2012 and March 29, 2012 was $21,768,000, $19,655,000, $8,564,000, $1,922,000, $0 and $31,085,000, respectively.
30
- (8)
- Includes consolidated theatres only.
| (In thousands, except per share and operating data) |
6 Months Ended June 30, 2016 |
6 Months Ended June 30, 2015 |
|||||
|---|---|---|---|---|---|---|---|
| |
(Successor) |
(Successor) |
|||||
Statement of Operations Data: |
|||||||
Revenues: |
|||||||
Admissions |
$ | 963,808 | $ | 952,076 | |||
Food and beverage |
487,698 | 451,040 | |||||
Other revenue |
78,473 | 71,087 | |||||
| | | | | | | | |
Total revenues |
1,529,979 | 1,474,203 | |||||
| | | | | | | | |
Operating Costs and Expenses: |
|||||||
Film exhibition costs |
525,294 | 518,504 | |||||
Food and beverage costs |
68,065 | 64,315 | |||||
Operating expense |
402,339 | 392,672 | |||||
Rent |
247,403 | 232,943 | |||||
General and administrative: |
|||||||
Merger, acquisition and transactions costs |
10,152 | 1,839 | |||||
Other |
39,150 | 22,678 | |||||
Depreciation and amortization |
122,721 | 115,026 | |||||
| | | | | | | | |
Operating costs and expenses |
1,415,124 | 1,347,977 | |||||
| | | | | | | | |
Operating income |
114,855 | 126,226 | |||||
Other expense (income) |
(84 | ) | 9,273 | ||||
Interest expense: |
|||||||
Corporate borrowings |
49,755 | 50,796 | |||||
Capital and financing lease obligations |
4,342 | 4,704 | |||||
Equity in (earnings) losses of non-consolidated entities |
(16,113 | ) | (10,686 | ) | |||
Investment expense (income) |
(9,778 | ) | (5,202 | ) | |||
| | | | | | | | |
Earnings (loss) from continuing operations before income taxes |
86,733 | 77,341 | |||||
Income tax provision (benefit) |
34,475 | 27,280 | |||||
| | | | | | | | |
Net earnings |
$ | 52,258 | $ | 50,061 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Earnings per share: |
|||||||
Basic |
$ | 0.53 | $ | 0.51 | |||
Diluted |
$ | 0.53 | $ | 0.51 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Average shares outstanding—Basic |
98,197 | 97,949 | |||||
Average shares outstanding—Diluted |
98,237 | 97,987 | |||||
Balance Sheet Data (at period end): |
|||||||
Cash and equivalents |
$ | 93,316 | $ | 179,340 | |||
Corporate borrowings(7) |
1,834,970 | 1,738,664 | |||||
Other long-term liabilities |
492,393 | 437,402 | |||||
Capital and financing lease obligations |
97,665 | 105,878 | |||||
Stockholder's equity |
1,552,846 | 1,521,052 | |||||
Total assets(7) |
4,948,541 | 4,719,670 | |||||
Other Data: |
|||||||
Net cash provided by operating activities |
$ | 133,948 | $ | 192,915 | |||
Capital expenditures |
140,325 | 143,757 | |||||
Screen additions |
12 | 12 | |||||
Screen acquisitions |
11 | 40 | |||||
Screen dispositions |
38 | — | |||||
Construction openings (closures), net |
(77 | ) | 32 | ||||
Average screens—continuing operations |
5,298 | 4,914 | |||||
Number of screens operated |
5,334 | 5,031 | |||||
Number of theatres operated |
386 | 350 | |||||
Screens per theatre |
13.8 | 14.4 | |||||
Attendance (in thousands) |
101,241 | 98,576 | |||||
31
SELECTED HISTORICAL FINANCIAL DATA OF CARMIKE
The following table sets forth selected historical financial and operating data for Carmike. The following selected financial data of Carmike for each of the five years ended December 31, 2015 have been derived from Carmike's audited consolidated financial statements. The financial data for the six month periods ended June 30, 2016 and 2015 have been derived from the unaudited financial statements of Carmike and the unaudited financial statements include all adjustments, consisting of normal recurring accruals, which Carmike considers necessary for a fair presentation of the financial position and the results of operations for these periods. The selected historical consolidated financial data provide only a summary and are not necessarily indicative of the results of future operations of Carmike, and should be read in conjunction with the audited consolidated financial statements and notes thereto, other financial information and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Carmike's Annual Report on Form 10-K for the year ended December 31, 2015, Carmike's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 and other information that Carmike has filed with the SEC and incorporated by reference into this proxy statement/prospectus. See "Where Stockholders Can Find More Information" beginning on page 164.
| |
As of and for the Six Months Ended June 30, |
As of and for the Year Ended December 31, |
||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2016 | 2015 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| |
(in millions, except per share and operating data) |
|||||||||||||||||||||
Statement of Operations Data: |
||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||
Admissions |
$ | 244.9 | $ | 246.3 | $ | 490.0 | $ | 427.2 | $ | 398.6 | $ | 339.6 | $ | 303.3 | ||||||||
Concessions and other |
166.0 | 157.1 | 314.4 | 262.7 | 236.2 | 194.3 | 168.7 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total operating revenues |
410.9 | 403.4 | 804.4 | 689.9 | 634.8 | 533.9 | 472.0 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Operating costs and expenses: |
||||||||||||||||||||||
Film exhibition costs |
138.6 | 141.0 | 276.7 | 235.5 | 220.3 | 184.1 | 163.8 | |||||||||||||||
Concession costs |
19.5 | 17.8 | 36.2 | 30.3 | 29.0 | 23.0 | 19.5 | |||||||||||||||
Salaries and benefits |
50.7 | 49.8 | 101.2 | 92.0 | 82.9 | 70.0 | 66.6 | |||||||||||||||
Theatre occupancy costs |
52.7 | 47.3 | 96.7 | 86.9 | 66.7 | 56.0 | 51.1 | |||||||||||||||
Other theatre operating costs |
68.3 | 65.1 | 133.5 | 121.0 | 100.8 | 82.9 | 80.1 | |||||||||||||||
General and administrative expenses |
23.7 | 18.2 | 34.0 | 32.2 | 25.8 | 24.5 | 19.1 | |||||||||||||||
Lease termination charges |
— | — | — | — | 3.1 | — | — | |||||||||||||||
Severance agreement charges |
— | — | — | — | 0.3 | 0.5 | 0.8 | |||||||||||||||
Depreciation and amortization |
30.5 | 26.8 | 56.4 | 49.2 | 42.4 | 33.3 | 31.8 | |||||||||||||||
(Gain) Loss on sale of property and equipment |
0.1 | (3.3 | ) | (3.2 | ) | (1.5 | ) | 0.3 | 1.0 | 0.3 | ||||||||||||
Write-off of note receivable |
— | — | — | — | — | — | 0.8 | |||||||||||||||
Impairment of long-lived assets |
2.3 | 1.9 | 7.5 | 3.2 | 3.7 | 4.2 | 3.1 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses |
386.4 | 364.6 | 739.0 | 648.8 | 575.3 | 479.5 | 437.0 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Operating income |
24.5 | 38.8 | 65.4 | 41.1 | 59.5 | 54.4 | 35.0 | |||||||||||||||
Interest expense |
24.8 | 25.3 | 50.0 | 51.7 | 49.5 | 36.0 | 34.1 | |||||||||||||||
Loss on extinguishment of debt |
— | 17.5 | 17.5 | — | — | 5.0 | — | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
(Loss) Income before income tax and income from unconsolidated affiliates |
(0.3 | ) | (4.0 | ) | (2.1 | ) | (10.6 | ) | 10.0 | 13.4 | 0.9 | |||||||||||
Income tax expense (benefit)(1) |
0.6 | (1.0 | ) | 3.4 | (1.4 | ) | 6.1 | (80.9 | ) | 10.3 | ||||||||||||
Income from unconsolidated affiliates |
1.5 | 1.9 | 5.1 | 0.4 | 1.6 | 1.2 | 1.8 | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) before discontinued operations |
— | — | (0.4 | ) | (8.8 | ) | 5.5 | 95.5 | (7.6 | ) | ||||||||||||
Income (loss) from discontinued operations, net of tax |
— | — | — | (0.1 | ) | 0.2 | 0.8 | (0.1 | ) | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) |
0.6 | (1.1 | ) | (0.4 | ) | (8.9 | ) | 5.7 | 96.3 | (7.7 | ) | |||||||||||
32
| |
As of and for the Six Months Ended June 30, |
As of and for the Year Ended December 31, |
||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2016 | 2015 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
| |
(in millions, except per share and operating data) |
|||||||||||||||||||||
Weighted average shares outstanding (in thousands) |
||||||||||||||||||||||
Basic |
24,567 | 24,393 | 24,595 | 23,392 | 19,540 | 15,761 | 12,807 | |||||||||||||||
Diluted |
24,975 | 24,393 | 24,595 | 23,392 | 20,051 | 16,086 | 12,807 | |||||||||||||||
Income (loss) per common share: |
||||||||||||||||||||||
Basic |
0.03 | (0.04 | ) | (0.02 | ) | (0.38 | ) | 0.29 | 6.11 | (0.60 | ) | |||||||||||
Diluted |
0.03 | (0.04 | ) | (0.02 | ) | (0.38 | ) | 0.29 | 5.99 | (0.60 | ) | |||||||||||
Dividends declared per share |
— | — | — | — | — | — | — | |||||||||||||||
Balance Sheet Data (at period end): |
||||||||||||||||||||||
Cash and cash equivalents |
108.5 | 132.8 | 102.5 | 97.5 | 143.9 | 68.5 | 13.6 | |||||||||||||||
Property and equipment, net of accumulated depreciation |
483.9 | 489.2 | 484.6 | 501.5 | 467.8 | 444.9 | 355.9 | |||||||||||||||
Total assets |
915.5 | 916.0 | 912.7 | 893.6 | 844.6 | 712.7 | 422.9 | |||||||||||||||
Total debt(2) |
461.3 | 459.4 | 454.7 | 445.1 | 455.3 | 434.7 | 315.4 | |||||||||||||||
Accumulated deficit |
(192.0 | ) | (193.3 | ) | (192.7 | ) | (192.2 | ) | (183.3 | ) | (189.0 | ) | (285.3 | ) | ||||||||
Total stockholders' equity (deficit) |
289.8 | 289.0 | 289.8 | 288.5 | 245.8 | 149.4 | (5.6 | ) | ||||||||||||||
Other Financial Data: |
||||||||||||||||||||||
Net cash provided by operating activities |
35.4 | 66.4 | 101.0 | 39.0 | 70.7 | 52.3 | 69.9 | |||||||||||||||
Net cash used in investing activities |
(21.2 | ) | (22.7 | ) | (79.3 | ) | (68.6 | ) | (79.0 | ) | (52.6 | ) | (29.6 | ) | ||||||||
Net cash provided by (used in) financing activities |
(8.1 | ) | (8.4 | ) | (16.7 | ) | (16.7 | ) | 83.7 | 55.2 | (39.7 | ) | ||||||||||
Capital expenditures |
16.3 | 27.1 | 54.2 | 59.7 | 37.8 | 35.1 | 19.3 | |||||||||||||||
Operating Data: |
||||||||||||||||||||||
Theatres at period end |
273 | 270 | 275 | 274 | 252 | 249 | 237 | |||||||||||||||
Screens at period end |
2,938 | 2,881 | 2,938 | 2,897 | 2,660 | 2,502 | 2,254 | |||||||||||||||
Average screens in operation |
2,947 | 2,889 | 2,895 | 2,758 | 2,516 | 2,286 | 2,230 | |||||||||||||||
Average screens per theatre |
10.8 | 10.6 | 10.7 | 10.6 | 10.6 | 10.0 | 9.5 | |||||||||||||||
Total attendance (in thousands) |
31,605 | 33,181 | 64,935 | 59,056 | 56,747 | 50,357 | 47,177 | |||||||||||||||
Average admissions per patron |
$ | 7.75 | $ | 7.42 | $ | 7.55 | $ | 7.23 | $ | 7.06 | $ | 6.85 | $ | 6.57 | ||||||||
Average concessions and other sales per patron |
$ | 5.25 | $ | 4.73 | $ | 4.84 | $ | 4.45 | $ | 4.19 | $ | 3.91 | $ | 3.66 | ||||||||
Average attendance per screen |
10,725 | 11,504 | 22,583 | 21,414 | 22,558 | 22,032 | 21,155 | |||||||||||||||
- (1)
- During
the quarter ended December 31, 2012, Carmike determined that it was more likely than not that the majority of Carmike's deferred tax assets
would be realized in the future and accordingly Carmike released its valuation allowance against its deferred tax assets of $86,500,000.
- (2)
- Includes current maturities of long term indebtedness, capital lease obligations and financing obligations.
33
COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
Presented below are the historical per share data for Carmike and AMC, pro forma combined share data for AMC and pro forma equivalent per share data for Carmike for the fiscal year ended December 31, 2015 and the six months ended June 30, 2016. The historical per share information of Carmike below is derived from audited financial statements as of and for the fiscal year ended December 31, 2015 and the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2016. The historical per share information of AMC is derived from audited financial statements as of and for the fiscal year ended December 31, 2015 and the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2016. The historical book value per share is computed by dividing total stockholders' equity by the number of shares of common stock outstanding at the end of the period.
The pro forma equivalent information shows the effect of the merger from the perspective of an owner of Carmike common stock. The information was computed by multiplying the pro forma combined earnings per share, pro forma book value per share and pro forma dividends per share for the six months ended June 30, 2016 by the assumed exchange ratio of 1.0819 shares of AMC Class A common stock for each share of Carmike common stock, with no proration.
The pro forma combined data below is presented for illustrative purposes only. The pro forma adjustments to the statement of earnings data are based on the assumption that the merger was completed on January 1, 2015, and the pro forma adjustments to the balance sheet data are based on the assumption that the merger was completed on June 30, 2016.
Either company's actual historical financial condition and results of operations may have been different had the companies always been combined. You should not rely on this information as being indicative of the historical financial condition and results of operations that would have actually been achieved or of the future results of the combined company after the completion of the merger.
You should read the information below together with the historical consolidated financial statements and related notes of AMC and Carmike as of and for the applicable periods, which have been incorporated by reference into this proxy statement/prospectus.
| |
Historical | |
Equivalent Basis Unaudited Pro Forma Combined |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
Unaudited Pro Forma Combined(1) |
||||||||||||
| |
AMC | Carmike | |||||||||||
Basic Earnings (Loss) Per Share |
|||||||||||||
Six Months Ended June 30, 2016 |
$ | 0.53 | $ | 0.03 | $ | 0.50 | $ | 0.54 | |||||
Year Ended December 31, 2015 |
$ | 1.06 | $ | (0.02 | ) | $ | 0.98 | $ | 1.06 | ||||
Diluted Earnings (Loss) per Share |
|||||||||||||
Six Months Ended June 30, 2016 |
$ | 0.53 | $ | 0.03 | $ | 0.50 | $ | 0.54 | |||||
Year Ended December 31, 2015 |
$ | 1.06 | $ | (0.02 | ) | $ | 0.98 | $ | 1.06 | ||||
Cash Dividends Declared Per Share |
|||||||||||||
Six Months Ended June 30, 2016 |
$ | 0.40 | $ | 0.00 | $ | 0.40 | $ | 0.43 | |||||
Year Ended December 31, 2015 |
$ | 0.80 | $ | 0.00 | $ | 0.80 | $ | 0.87 | |||||
Book Value Per Share |
|||||||||||||
As of June 30, 2016 |
$ | 15.94 | $ | 11.88 | $ | 11.90 | $ | 12.88 | |||||
As of December 31, 2015 |
$ | 15.80 | $ | 11.78 | $ | 11.76 | $ | 12.73 | |||||
- (1)
- The pro forma number of shares of AMC Class A common stock outstanding assumes the issuance of shares of Class A common stock to former Carmike stockholders, calculated as 30% of the product obtained by multiplying (i) the average number of shares of Carmike common stock outstanding (including in the diluted number the exercise of outstanding options and outstanding restricted stock and performance units) and the exchange ratio of 1.0819.
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COMPARATIVE STOCK PRICE DATA AND DIVIDEND INFORMATION
Shares of AMC Class A common stock are listed for trading on the NYSE under the symbol "AMC." Shares of Carmike common stock are listed for trading on the NASDAQ under the symbol "CKEC."
Historical Market Price Information
The following table sets forth the high and low reported sale prices for the AMC Class A common stock and the Carmike common stock for the periods shown as reported on the NYSE or the NASDAQ, respectively.
On October 5, 2016, the last practicable day prior to the date of this proxy statement/prospectus, there were 21,613,532 shares of AMC Class A common stock outstanding and 24,388,587 shares of Carmike common stock outstanding. As of such date, AMC had 55 holders of record of its Class A common stock and Carmike had 267 holders of record of its common stock.
| |
AMC | Carmike | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
High | Low | Dividend Paid (per share) |
High | Low | Dividend Paid (per share) |
|||||||||||||
Fiscal year Ended December 31, 2016 |
|||||||||||||||||||
First Quarter |
$ | 29.92 | $ | 19.28 | $ | 0.20 | $ | 30.70 | $ | 18.52 | $ | 0.00 | |||||||
Second Quarter |
30.31 | 25.75 | 0.20 | 31.26 | 29.66 | 0.00 | |||||||||||||
Third Quarter |
32.28 | 26.97 | 0.20 | 32.88 | 29.21 | 0.00 | |||||||||||||
Fourth Quarter (through October 5, 2016) |
32.38 | 31.11 | 0.00 | 33.16 | 32.63 | 0.00 | |||||||||||||
Fiscal year Ended December 31, 2015 |
|||||||||||||||||||
First Quarter |
$ | 35.86 | $ | 24.97 | $ | 0.20 | $ | 34.94 | $ | 24.00 | $ | 0.00 | |||||||
Second Quarter |
35.38 | 27.87 | 0.20 | 34.14 | 26.09 | 0.00 | |||||||||||||
Third Quarter |
32.90 | 24.27 | 0.20 | 28.61 | 18.93 | 0.00 | |||||||||||||
Fourth Quarter |
27.50 | 22.91 | 0.20 | 26.48 | 19.67 | 0.00 | |||||||||||||
Fiscal year Ended December 31, 2014 |
|||||||||||||||||||
First Quarter |
$ | 26.68 | $ | 19.75 | $ | 0.00 | $ | 32.60 | $ | 25.63 | $ | 0.00 | |||||||
Second Quarter |
25.14 | 20.99 | 0.20 | 36.22 | 27.67 | 0.00 | |||||||||||||
Third Quarter |
25.34 | 22.09 | 0.20 | 35.49 | 30.50 | 0.00 | |||||||||||||
Fourth Quarter |
27.08 | 21.10 | 0.20 | 32.51 | 24.83 | 0.00 | |||||||||||||
Recent and Comparative Market Price Information
The following table presents trading information for AMC Class A common stock and Carmike common stock on July 22, 2016, the last trading day before the public announcement of the merger, and October 5, 2016, the most recent practicable trading day before the filing of this proxy statement/prospectus. For illustrative purposes, the following table also provides Carmike equivalent per share information, which amounts are calculated by multiplying the closing sales prices for shares of AMC Class A common stock by 1.0819, representing the approximate per share value of the stock consideration that a Carmike stockholder will be entitled to receive as of such dates, in exchange for each share of Carmike common stock they hold at the effective time of the merger, assuming such stockholder elects to receive, or receives as a result of proration, the stock consideration for such share.
The market prices of shares of AMC Class A common stock and Carmike common stock fluctuate, and the value of the stock consideration will fluctuate with the market price of the AMC Class A
35
common stock. As a result, you are urged to obtain current market quotations of AMC Class A common stock before making any decision with respect to the merger.
| |
AMC Class A Common Stock (Close) |
Carmike Common Stock (Close) |
Equivalent Per Share Value |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
July 22, 2016 |
$ | 30.60 | $ | 30.13 | $ | 33.11 | ||||
October 5, 2016 |
$ | 31.94 | $ | 33.01 | $ | 34.56 | ||||
Carmike. The holders of Carmike common stock are entitled to receive dividends as are lawfully declared in Carmike common stock by the Carmike Board. No cash dividends were paid on Carmike common stock during the first six months of 2016 or during fiscal year 2015 and 2014. Carmike's ability to pay future cash dividends will depend upon, among other things, earnings, anticipated expansions, capital requirements, compliance with limitations under Carmike's senior secured loan and revolving credit facilities, and Carmike's financial condition. Furthermore, under the terms of the amended and restated merger agreement, Carmike is generally prohibited from declaring, setting aside or paying any dividend or distribution. Carmike does not expect to pay cash dividends in the foreseeable future.
AMC. The holders of AMC Class A common stock are entitled to receive dividends as are lawfully declared on AMC Class A common stock by the AMC Board. AMC paid a $0.20 per share cash dividend on each share of AMC Class A common stock and Class B common stock during the first three fiscal quarters of 2016, for each fiscal quarter during fiscal year 2015 and for the second, third and fourth fiscal quarters of 2014. Subject to legally available funds, AMC intends to pay a quarterly cash dividend at an annual rate initially equal to approximately $0.80 per share (or a quarterly rate initially equal to approximately $0.20 per share) of AMC's Class A and Class B common stock. The payment of future dividends is subject to the AMC Board's discretion and dependent on many considerations, including limitations imposed by covenants in the agreements governing AMC's indebtedness, operating results, capital requirements, strategic considerations and other factors.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Certain statements made in this proxy statement/prospectus, the documents that are incorporated by reference in this proxy statement/prospectus and other written or oral statements made by or on behalf of AMC and Carmike may constitute "forward-looking statements" within the meaning of the Exchange Act. Statements that are not historical facts, including statements about Carmike's or AMC's beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words, "will," "intends," "believes," "expects," "anticipates," "plans," "estimates" or similar expressions. These statements are based on beliefs and assumptions of management, which in turn are based on currently available information. Similarly, statements made herein and elsewhere regarding AMC's pending acquisitions of Carmike and Odeon/UCI, referred to as the "pending acquisitions," are also forward-looking statements, including statements regarding the anticipated closing date of the pending acquisitions, the ability to obtain regulatory approvals or to satisfy closing conditions, the costs of the pending acquisitions or the source or structure of the financings for the pending acquisitions, the expected benefits of the pending acquisitions on AMC's future business, operations and financial performance and AMC's ability to successfully integrate the businesses acquired as part of the pending acquisitions. The forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond Carmike's or AMC's ability to control or predict. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include, but are not limited to:
- •
- the occurrence of any event, change or other circumstances that could give rise to the termination of the agreements relating to the
pending acquisitions;
- •
- the inability to complete the pending acquisitions due to the failure to obtain stockholder or regulatory approval for the pending
acquisitions or the failure to satisfy other conditions of the pending acquisitions within the proposed timeframe or at all;
- •
- disruption in key business activities or any impact on Carmike's, Odeon/UCI's or AMC's relationships with third parties as a result of
the announcement of the pending acquisitions;
- •
- the failure to obtain the necessary financing arrangements as set forth in the debt commitment letters entered in connection with the
pending acquisitions, or the failure of the pending acquisitions to close for any other reason;
- •
- risks related to disruption of management attention from ongoing business operations due to the pending acquisitions;
- •
- the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted against Carmike, Odeon/UCI,
AMC and others relating to the pending acquisitions;
- •
- the risk that the pendency of the pending acquisitions disrupts current plans and operations and the potential difficulties in
employee retention as a result of the pendency of the pending acquisitions;
- •
- the amount of the costs, fees, expenses and charges related to the pending acquisitions;
- •
- adverse regulatory decisions;
- •
- unanticipated changes in the markets for Carmike's, Odeon/UCI's or AMC's business;
- •
- general economic conditions in Carmike's, Odeon/UCI's or AMC's regional, national, and international markets;
- •
- the ability to comply with covenants contained in the agreements governing Carmike's, Odeon/UCI's or AMC's indebtedness;
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- •
- the ability of Carmike, Odeon/UCI or AMC to operate at expected levels of cash flow;
- •
- financial market conditions including, but not limited to, changes in interest rates and the availability and cost of capital and the
effects of the exit of the United Kingdom from the European Union;
- •
- Carmike's, Odeon/UCI's and AMC's ability to meet contractual obligations, including all outstanding financing commitments;
- •
- the availability of suitable motion pictures for exhibition in Carmike's, Odeon/UCI's and AMC's markets;
- •
- competition in Carmike's, Odeon/UCI's and AMC's markets;
- •
- operating a business in markets AMC is unfamiliar with, including acceptance by moviegoers of AMC initiatives that are new to those
markets;
- •
- AMC's effective implementation, and customer acceptance, of its marketing strategies;
- •
- competition with other forms of entertainment;
- •
- the effect of Carmike's, Odeon/UCI's and AMC's leverage on their financial condition;
- •
- prices and availability of operating supplies;
- •
- the impact of continued cost control procedures on operating results;
- •
- the impact of asset impairments;
- •
- the impact of terrorist acts;
- •
- changes in tax laws, regulations and rates; and
- •
- financial, legal, tax, regulatory, legislative or accounting changes or actions that may affect the overall performance of Carmike's, Odeon/UCI's or AMC's business.
Consider these factors carefully in evaluating the forward-looking statements. Additional factors that may cause results to differ materially from those described in the forward-looking statements are set forth in this proxy statement/prospectus, AMC's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on March 8, 2016 and Carmike's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on February 29, 2016, each under the heading "Item 1A. Risk Factors," and in their subsequently filed reports with the SEC, including Forms 10-Q and 8-K. You are cautioned not to place undue reliance on the forward-looking statements included in this proxy statement/prospectus, which speak only as of the date hereof. Neither AMC or Carmike undertake to update any of these statements in light of new information or future events, except as required by applicable law.
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An investment in AMC Class A common stock involves significant risks. You should consider carefully the following risk factors, together with all of the other information included in, or incorporated by reference into, this proxy statement/prospectus before deciding how to vote or making an election with respect to the form of merger consideration you desire to receive. In addition, you should read and consider the risks associated with the businesses of AMC and Carmike. In particular, please read Part I, Item 1A. "Risk Factors," in the Annual Reports on Form 10-K for the year ended December 31, 2015, for each of AMC and Carmike filed on March 8, 2016 and February 29, 2016, respectively, and any updates to these risk factors included in other filings made with the SEC. This proxy statement/prospectus also contains forward-looking statements that involve risks and uncertainties. Please read "Cautionary Statement Concerning Forward-Looking Information."
Because the stock consideration is fixed and because the market price of AMC Class A common stock will fluctuate prior to the consummation of the merger, Carmike stockholders who elect to receive AMC Class A common stock as part of the merger consideration cannot be sure of the market value of the AMC Class A common stock they will receive in the merger until the effective time of the merger.
Carmike stockholders who elect to receive stock consideration or make a cash election or no election that is subject to proration will receive AMC Class A common stock as part of the merger consideration. The market value of the AMC Class A common stock that such Carmike stockholders will receive in the merger will depend on the trading price of the AMC Class A common stock as of the effective time of the merger. The exchange ratio that determines the number of shares of AMC Class A common stock that Carmike stockholders will receive in the merger is fixed. This means that there is no mechanism contained in the amended and restated merger agreement that would adjust the number of shares of AMC Class A Class A common stock that Carmike stockholders will receive based on any decreases in the trading price of the AMC Class A common stock. If the AMC Class A common stock price as of the effective time of the merger is less than the AMC Class A common stock price as of the date that the amended and restated merger agreement was signed, then the market value of the consideration received by the Carmike stockholders who receive AMC Class A common stock will be less than contemplated at the time the amended and restated merger agreement was signed.
AMC Class A common stock price changes may result from a variety of factors, including general market and economic conditions, market expectations regarding the impact of the merger and the acquisition of Odeon/UCI on AMC's future financial performance, conditions affecting the entertainment industry generally, changes in AMC's business, operations and prospects, and regulatory considerations and other risk factors set forth or incorporated by reference into this proxy statement/prospectus. Many of these factors are beyond AMC's and Carmike's control. For historical and current market prices of AMC Class A common stock and Carmike common stock, please read "Comparative Stock Price Data and Dividend Information" in this proxy statement/prospectus.
Carmike stockholders may not receive the amount of cash consideration or stock consideration they elected to receive due to proration, and therefore such stockholders may receive consideration having an aggregate value that is less than the aggregate value of the consideration they elected to receive.
Elections regarding the type of merger consideration will be subject to proration if Carmike stockholders, in the aggregate, elect to receive more or less cash consideration or stock consideration than the aggregate amount of cash consideration and stock consideration required to be paid pursuant to the amended and restated merger agreement. Accordingly, some of the consideration Carmike stockholders receive in the merger may differ from the type of consideration they elected to receive.
39
The relative proportion of AMC Class A common stock and cash that a Carmike stockholder receives in the merger also may have an aggregate value that is higher or lower than the relative proportion of stock and cash that the Carmike stockholder elected to receive. A discussion of the proration mechanism can be found under the heading "Terms of the Amended and Restated Merger Agreement—Proration and Allocation."
The merger may not be consummated even if Carmike stockholders approve the merger proposal.
The amended and restated merger agreement contains conditions, some of which are beyond the parties' control, that, if not satisfied or waived, may prevent, delay or otherwise result in the merger not occurring, even though Carmike stockholders may have voted to approve the merger proposal. AMC and Carmike cannot predict with certainty whether and when any of the conditions to the completion of the merger will be satisfied.
Among the conditions to consummating the merger is that no injunction or other order preventing the consummation of the merger shall have been issued by any court or governmental authority of competent jurisdiction in the United States. Consequently, if any lawsuit is filed challenging the merger and the plaintiff is successful in obtaining an injunction preventing the parties to the amended and restated merger agreement from consummating the merger, such injunction may prevent the merger from being completed in the expected timeframe, or at all.
Any delay in completing the merger could cause AMC not to realize, or delay the realization of, some or all of the benefits that AMC expects to achieve from the merger. In addition, AMC and Carmike can agree not to consummate the merger even if the Carmike stockholders approve the merger proposal and the conditions to the closing of the merger are otherwise satisfied.
The merger is subject to the expiration of applicable waiting periods and the receipt of approvals or consents from regulatory authorities that may impose conditions that could have an adverse effect on AMC, Carmike or the combined company or, if not obtained, could prevent completion of the merger.
Before the merger may be completed, any waiting period (or extension thereof) applicable to the merger under the HSR Act must have expired or been terminated, and any approvals or consents required in connection with the merger must have been obtained under the HSR Act. In addition, the merger may be reviewed under U.S. state laws. In deciding whether to grant the required regulatory approval or consent, the relevant governmental entities will consider the effect of the merger on competition within their relevant jurisdiction. The terms and conditions of the approvals and consents that are granted may impose requirements, limitations or costs, or place restrictions on the conduct of the combined company's business. Under the amended and restated merger agreement, AMC and Carmike have agreed to use their reasonable best efforts to cause the expiration or termination of the waiting period under the HSR Act, and obtain any necessary approvals and consents, and therefore may be required to comply with conditions or limitations imposed by governmental authorities.
Carmike may not, however, without AMC's written consent, agree to or effect any divestiture, license, hold separate of any of its businesses or assets or any other limitation on its ability to operate or manage its business or assets. If necessary to avoid the commencement of any action by any governmental authority challenging the transactions under the amended and restated merger agreement under applicable laws or, if already commenced, to avoid the entry of, or to effect the dissolution of, any order that would prohibit, prevent or restrict the consummation of the transactions contemplated by the amended and restated merger agreement, AMC will, subject to certain limitations, offer, negotiate and agree to, and will effect, any divestiture, license, or hold separate, or any limitation on its ability to operate or manage, AMC's or Carmike's business or assets, except that AMC will not be required to agree to a divestiture, license or hold separate of (1) Carmike's, AMC's or their respective affiliates' theatres that would result in a loss of theatre-level cash flows in excess of $25 million in the
40
aggregate, subject to certain limited exceptions, or (2) non-theatre assets with an aggregate net book value in excess of $20 million.
There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations, or restrictions will not have the effect of delaying completion of the merger or imposing additional material costs on or materially limiting the revenues of the combined company following the completion of the merger. In addition, neither AMC nor Carmike can provide assurances that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger. See "Terms of the Amended and Restated Merger Agreement—Consents, Approvals and Filings—Antitrust Cooperation" beginning on page 128 of this proxy statement/prospectus
Financial projections by Carmike may not prove accurate.
In performing its financial analyses and rendering its opinion regarding the fairness, from a financial point of view, of the merger consideration to the Carmike stockholders, J.P. Morgan, Carmike's financial advisor, reviewed and relied on, among other things, internal financial analyses and forecasts for Carmike, on a stand-alone basis, prepared by Carmike management with input from Carmike management. These financial projections speak only as of the date made and were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties, various assumptions and may not be achieved in full, at all or within projected timeframes. The financial projections on which the financial advisor based its opinion could turn out to be inaccurate.
While the amended and restated merger agreement is in effect, Carmike may lose opportunities to enter into different business combination transactions with other parties on more favorable terms, and may be limited in its ability to pursue other attractive business opportunities and to attract and retain qualified personnel.
While the amended and restated merger agreement is in effect, Carmike is prohibited from, directly or indirectly, initiating, soliciting, knowingly encouraging or facilitating (including by way of furnishing information) any inquiries regarding, or the making or submission of any proposal or offer that constitutes, or may reasonably be expected to lead to, an acquisition proposal. As a result of these provisions in the amended and restated merger agreement, Carmike may lose opportunities to enter into more favorable transactions.
Carmike has also agreed to refrain from taking certain actions with respect to its business and financial affairs pending completion of the merger or termination of the amended and restated merger agreement. These restrictions and the non-solicitation provisions described above could be in effect for an extended period of time if completion of the merger is delayed and the parties agree to extend the December 5, 2016 termination date.
Furthermore, the uncertainty surrounding the approval of the merger proposal may adversely affect Carmike's ability to attract and retain qualified personnel. The uncertainty relating to the possibility of the merger may increase the risk that Carmike could experience higher than normal rates of attrition or that Carmike experiences increased difficulty in attracting qualified personnel or incur higher expenses to do so. High levels of attrition among the management and employee personnel necessary to operate Carmike's business or difficulties or increased expense incurred to replace any personnel who leave, could materially adversely affect Carmike's business or results of operations.
If the merger does not occur, AMC and Carmike will not benefit from the expenses they have incurred in the pursuit of the merger.
The merger may not be completed. If the merger is not completed, AMC and Carmike will have incurred substantial expenses for which no ultimate benefit will have been received by either company.
41
AMC and Carmike expect to incur merger-related expenses consisting of independent advisory, legal and accounting fees, and financial printing and other related charges, much of which may be incurred even if the merger is not completed. In addition, if the amended and restated merger agreement is terminated under specified circumstances, either AMC or Carmike may be required to pay certain termination fees and expenses of the other party. See "Terms of the Amended and Restated Merger Agreement—Fees and Expenses" beginning on page 140 of this proxy statement/prospectus.
AMC and Carmike are subject to class action lawsuits relating to the merger and may be subject to additional class action lawsuits, which could materially adversely affect their business, financial condition and operating results and could delay or prevent the merger.
AMC, Carmike and their respective directors and officers are subject to class action lawsuits relating to the merger and other additional lawsuits may be filed. Such litigation is very common in connection with acquisitions of public companies, regardless of any merits related to the underlying acquisition. While AMC and Carmike will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could have an adverse effect on AMC's and Carmike's business, financial condition and operating results.
Failure to complete, or significant delays in completing, the merger could negatively affect the trading prices of AMC Class A common stock and Carmike common stock and the future business and financial results of AMC and Carmike.
Completion of the merger is not assured and is subject to risks, including the risks that approval of the merger by the Carmike stockholders or by governmental agencies is not obtained or that other closing conditions are not satisfied. If the merger is not completed, or if there are significant delays in completing the merger, the trading prices of AMC Class A common stock and Carmike common stock and the respective future business and financial results of AMC and Carmike could be negatively affected, and each of them will be subject to several risks, including the following:
- •
- negative reactions from the financial markets, including declines in the prices of AMC Class A common stock or Carmike common
stock due to the fact that current prices may reflect a market assumption that the merger will be completed;
- •
- having to pay certain significant costs, including possible termination fees, or any damages payable to the other party under the
terms and conditions of the amended and restated merger agreement; and
- •
- the attention of management of AMC and Carmike will have been diverted to the merger rather than each company's own operations and pursuit of other opportunities that could have been beneficial to that company.
The merger is a taxable transaction and the resulting tax liability of a Carmike stockholder, if any, will depend on each such Carmike stockholder's particular situation.
The receipt of AMC Class A common stock, cash or a combination of AMC Class A common stock and cash as merger consideration in exchange for Carmike common stock in the merger will be treated as a taxable sale by each Carmike stockholder for U.S. federal income tax purposes. The amount of gain or loss recognized by each Carmike stockholder in the merger will vary depending on each Carmike stockholder's particular situation, including the value of the AMC Class A common stock and/or amount of cash received by each stockholder as merger consideration in the merger, and the adjusted tax basis of the Carmike common stock exchanged by each stockholder in the merger.
For a more complete discussion of certain U.S. federal income tax consequences of the merger, see "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy statement/prospectus.
42
Directors and executive officers of Carmike have interests in the merger that may be different from, or in addition to, the interests of Carmike's stockholders generally.
The directors and executive officers of Carmike have interests in the merger that may be different from, or in addition to, the interests of Carmike's stockholders generally. These interests may create potential conflicts of interest. These interests include:
- •
- the amended and restated merger agreement provides for accelerated vesting of all outstanding Carmike equity awards upon the
consummation of the merger;
- •
- certain executive officers of Carmike are entitled to separation benefits in the event that, in connection with or following the
merger, the executive is terminated by Carmike without cause, or the executive terminates for "good reason" (with the amended and restated merger agreement acknowledging that, as a result of the
merger, certain named executive officers will be deemed to have experienced a "good reason" event);
- •
- Carmike's directors and executive officers are entitled to continued indemnification and insurance coverage following completion of
the merger under Carmike's organizational documents, indemnification agreements and the amended and restated merger agreement; and
- •
- the amended and restated merger agreement requires AMC to provide employees of Carmike who continue as employees of AMC or any of its subsidiaries (including Carmike) benefits that are no less favorable in the aggregate than the level of such employee benefits provided to such employees as of the date of the amended and restated merger agreement, for a period of twelve months following the closing of the merger.
Carmike stockholders should be aware of these interests when they consider the recommendation of the Carmike Board that Carmike stockholders vote in favor of the proposal to adopt the amended and restated merger agreement and approve the other merger-related proposals. The Carmike Board was aware of the different or additional interests set forth in this proxy statement/prospectus and considered such interests along with other matters in approving the amended and restated merger agreement and the transactions contemplated by the amended and restated merger agreement, including the merger.
For more information about these interests, see "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Interests of Certain Persons in the Merger" beginning on page 86 of this proxy statement/prospectus
Risk Factors Relating to the Ownership of AMC Class A common stock
The AMC Class A common stock to be received by Carmike stockholder as a result of the merger has different rights from Carmike common stock.
Following completion of the merger, Carmike stockholders will no longer hold Carmike common stock, but may instead be stockholders of AMC. AMC and Carmike are both Delaware corporations. There are important differences, however, between the rights of Carmike stockholders and the rights of AMC Class A common stock stockholders. See "Comparison of Rights of AMC and Carmike Stockholders" for a discussion of the different rights associated with Carmike common stock and AMC Class A common stock.
The price of AMC Class A common stock may be volatile, and Carmike stockholders who receive shares of AMC Class A common stock as a result of the merger could lose a significant portion of their investments.
The market price of the AMC Class A common stock could be volatile, and Carmike stockholders who receive shares of AMC Class A common stock may not be able to resell their AMC Class A common stock at or above the price of the AMC Class A common stock on the date the amended and
43
restated merger agreement was signed or the effective date of the merger, due to fluctuations in the market price of AMC Class A common stock, including changes in price caused by factors unrelated to AMC's operating performance or prospects.
Specific factors that may have a significant effect on the market price for AMC's Class A common stock include:
- •
- changes in stock market analyst recommendations or earnings estimates regarding AMC Class A common stock, other companies
comparable to AMC;
- •
- actual or anticipated fluctuations in AMC's operating results or future prospects;
- •
- reaction to AMC's public announcements;
- •
- strategic actions taken by AMC or its competitors, such as acquisitions;
- •
- the closing or failure to close AMC's acquisition of Odeon/UCI;
- •
- recruitment or departure of key AMC personnel;
- •
- new laws or regulations or new interpretations of existing laws or regulations applicable to AMC's business and operations;
- •
- changes in tax or accounting standards, policies, guidance, interpretations or principles;
- •
- adverse conditions in the financial markets or general U.S., European or international economic conditions, including those resulting
from war, the United Kingdom's exit from the European Union, incidents of terrorism and responses to such events; and
- •
- sales of AMC Class A common stock by AMC, members of its management team or significant stockholders.
AMC may not be able to realize the anticipated benefits of its pending acquisitions.
In any acquisition, including AMC's pending acquisitions of Carmike and Odeon/UCI, AMC expects to realize certain benefits, including benefits from cost savings through, for example, the reduction of overhead and theatre level costs, and from revenue enhancements. However, there can be no assurance that AMC will be able to generate sufficient cash flow from these acquisitions to service any indebtedness incurred to finance the pending acquisitions or realize any other anticipated benefits. Nor can there be any assurance that AMC's profitability will be improved by any one or more acquisitions. Any acquisition, including AMC's pending acquisition of Carmike and Odeon/UCI, will involve risks, such as:
- •
- the difficulty of assimilating and integrating the acquired operations and personnel into AMC's current business;
- •
- potential disruption of its ongoing business;
- •
- the diversion of management's attention and other resources;
- •
- the possible inability of management to maintain uniform standards, controls, procedures and policies;
- •
- unanticipated expenses and delays in completing acquired development projects;
- •
- management of an international, geographically remote business;
- •
- entering into markets in which AMC has limited experience, including the possibility that AMC strategic initiatives are not accepted by moviegoers in those markets;
44
- •
- compliance with complex and changing domestic and foreign laws and regulations, including tax, employment and data privacy laws and
regulations;
- •
- potential loss of key employees of Odeon/UCI or Carmike and the potential impairment of relationships with other employees;
- •
- the possibility that any liabilities AMC may incur or assume may prove to be more burdensome than anticipated; and
- •
- the possibility that the acquired theatres do not perform as expected.
AMC's ability to pay dividends in the future is limited by cash generated by operations and contractual restrictions.
Subject to legally available funds, AMC intends to pay quarterly cash dividends. AMC is a holding company and has no direct operations and will only be able to pay dividends from available cash on hand and funds received from its subsidiaries. The ability of AMC's subsidiaries to make distributions to AMC will depend on their ability to generate substantial operating cash flow. AMC's ability to pay dividends to its stockholders is subject to the terms of its senior secured credit facility, the indentures governing its outstanding notes and any future financing agreements, including those that may be entered into in connection with the Carmike and Odeon/UCI acquisitions. AMC's operating cash flow and ability to comply with restricted payment covenants in its debt instruments will depend on future performance, which will be subject to prevailing economic conditions and to financial, business and other factors beyond AMC's control. In addition, dividend payments are not mandatory or guaranteed, and AMC's board of directors may decrease the level of dividends or entirely discontinue the payment of dividends. AMC may not pay dividends as a result of the following additional factors, among others:
- •
- AMC is not legally or contractually required to pay dividends;
- •
- while AMC currently intends to pay a regular quarterly dividend, this policy could be modified or revoked at any time;
- •
- even if AMC does not modify or revoke its dividend policy, the actual amount of dividends distributed and the decision to make any
distribution is entirely at the discretion of AMC's board of directors and future dividends, if any, will depend on, among other things, results of operations, cash requirements, financial condition,
business opportunities, provisions of applicable law and other factors that AMC's board of directors may deem relevant;
- •
- the amount of dividends distributed is and will be subject to contractual restrictions under the restrictive payment covenants
contained in:
- •
- the indentures governing AMC's debt securities;
- •
- the terms of AMC's senior secured credit facility; and
- •
- the terms of any other outstanding or future indebtedness incurred by us or any of AMC's subsidiaries;
- •
- the amount of dividends distributed is subject to state law restrictions; and
- •
- AMC stockholders have no contractual or other legal right to dividends.
The maximum amount AMC would be permitted to distribute in compliance with its senior secured credit facility and the indentures governing its debt securities was approximately $1.3 billion as of June 30, 2016. As a result of the foregoing limitations on AMC's ability to make distributions, AMC cannot make any assurance that it will be able to make all intended quarterly dividend payments.
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AMC has elected to take advantage of the "controlled company" exemption to the corporate governance rules for publicly-listed companies, which could make AMC Class A common stock less attractive to some investors or otherwise harm AMC's stock price.
Because AMC qualifies as a "controlled company" under the corporate governance rules for publicly-listed companies, AMC is not required to have a majority of the AMC Board be independent, nor is AMC required to have a compensation committee or an independent nominating function. In light of AMC's status as a controlled company, the AMC Board has determined not to have a majority of its Board of Directors be independent, have a compensation committee composed solely of independent directors or have an independent nominating function and has chosen to have the full board of directors be directly responsible for nominating members of AMC's Board. Accordingly, should the interests of Wanda, as AMC's controlling stockholder, differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for publicly-listed companies. AMC's status as a controlled company could make AMC's Class A common stock less attractive to some investors or otherwise harm AMC's stock price.
AMC's controlling shareholder owns more than 91% of the combined voting power of its common stock and has significant influence over its corporate management and affairs.
AMC's Class B common stock has three votes per share, and AMC's Class A common stock, which is the publicly traded stock, has one vote per share. As of October 5, 2016, Wanda owns approximately 75,826,927 shares of Class B common stock, or 77.82% of AMC's outstanding common stock, representing approximately 91.32% of the voting power of AMC's outstanding common stock. As such, Wanda has significant influence over AMC's reporting and corporate management and affairs, and, because of the three-to-one voting ratio between AMC's Class B and Class A common stock, Wanda will continue to control a majority of the combined voting power of AMC's common stock and therefore be able to control all matters submitted to AMC's stockholders for approval (including election of directors and approval of significant corporate transactions, such as mergers) so long as the shares of Class B common stock owned by Wanda and its permitted transferees represent at least 30% of all outstanding shares of AMC Class A and Class B common stock. The shares of AMC Class B common stock automatically convert to shares of Class A common stock upon Wanda and its permitted transferees holding less than 30% of all outstanding shares of AMC's Class A and Class B common stock.
The super voting rights of AMC Class B common stock and other anti-takeover protections in AMC's amended and restated certificate of incorporation and AMC's amended and restated bylaws may discourage or prevent a takeover of AMC, even if an acquisition would be beneficial to AMC's stockholders.
Provisions contained in AMC's amended and restated certificate of incorporation and amended and restated bylaws, as amended, as well as provisions of the DGCL and the supermajority rights of AMC's Class B common stockholder, could delay or make it more difficult to remove incumbent directors or for a third party to acquire AMC, even if a takeover would benefit AMC's stockholders. These provisions include:
- •
- a dual class common stock structure, which provides Wanda with the ability to control the outcome of matters requiring stockholder
approval, even if they own significantly less than a majority of the shares of outstanding AMC Class A and Class B common stock;
- •
- a classified board of directors;
- •
- the sole power of a majority of the board of directors to fix the number of directors;
- •
- limitations on the removal of directors;
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- •
- the sole power of the board of directors to fill any vacancy on the board of directors, whether such vacancy occurs as a result of an
increase in the number of directors or otherwise;
- •
- the ability of the AMC Board to designate one or more series of preferred stock and issue shares of preferred stock without
stockholder approval; and
- •
- the inability of stockholders to call special meetings.
AMC's issuance of shares of preferred stock could delay or prevent a change of control. The AMC Board has the authority to cause it to issue, without any further vote or action by the stockholders, up to 50,000,000 shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in control of AMC without further action by the stockholders, even where stockholders are offered a premium for their shares.
AMC's incorporation under Delaware law, the ability of the AMC Board to create and issue a new series of preferred stock or a stockholder rights plan and certain other provisions of AMC's amended and restated certificate of incorporation and amended and restated bylaws, as amended, could impede a merger, takeover or other business combination involving AMC or the replacement of AMC's management or discourage a potential investor from making a tender offer for AMC Class A common stock, which, under certain circumstances, could reduce the market value of AMC Class A common stock.
There may be future dilution of AMC Class A common stock, which could adversely affect the market price of shares of AMC Class A common stock.
AMC is not restricted from issuing additional shares of AMC Class A common stock. In the future, AMC may issue shares of AMC Class A common stock to raise cash to refinance indebtedness or for working capital, future activities, acquisitions or other purposes. AMC may also acquire interests in other companies by using a combination of cash and shares of AMC Class A common stock or just shares of AMC Class A common stock. In fact, AMC has agreed to issue shares of AMC Class A common stock as part of the consideration delivered in connection with its acquisition of Odeon/UCI. AMC may also issue securities convertible into, or exchangeable for, or that represent the right to receive, shares of AMC Class A common stock. Any of these events may dilute the ownership interests of current AMC stockholders in AMC, reduce AMC's earnings per share or have an adverse effect on the price of shares of AMC Class A common stock.
Sales of a substantial amount of shares of AMC Class A common stock in the public market could adversely affect the market price of shares of AMC Class A common stock.
Sales of a substantial amount of shares of AMC Class A common stock in the public market, or the perception that these sales may occur, could reduce the market price of shares of AMC Class A common stock. Because the receipt of the merger consideration will be taxable for U.S. federal income tax purposes, a large number of Carmike stockholders may choose to sell the shares of AMC Class A common stock they receive promptly following the merger. A large number of shares of AMC Class A common stock may be sold in the public market as a result of its acquisition of Odeon/UCI. As part of this transaction, AMC has agreed to issue to the seller of Odeon/UCI AMC Class A common stock with a value of GBP £125 million ($159.3 million, assuming a GBP/USD exchange rate of 1.2747, which was the exchange rate on October 5, 2016). AMC has also agreed to file a registration statement registering the shares of AMC Class A common stock issued in connection with its purchase of Odeon/UCI within 60 days of the closing of the Odeon/UCI transaction. While the Odeon/UCI seller has agreed to certain six-month and one-year lockup periods following consummation of the transaction, a
47
large number of shares of AMC Class A common stock could be sold promptly upon the expiration of such lock-up periods. Such sales could reduce the market price of shares of AMC Class A common stock.
Pursuant to a Registration Rights Agreement dated December 23, 2013 by and among AMC and Wanda, AMC has agreed to use its best efforts to effect registered offerings upon request from Wanda and to grant incidental or "piggyback" registration rights with respect to any registrable securities held by Wanda. The obligation to effect any demand for registration by Wanda will be subject to certain conditions, including limitations on the number of demand registrations and limitations on the minimum value of securities to be registered.
Following consummation of the acquisition of Odeon/UCI, AMC has agreed to use its best efforts to grant certain incidental or "piggyback" registration rights with respect to securities issued in connection with the Odeon/UCI transaction.
The exercise of such registration rights by Wanda and/or the seller of Odeon/UCI may substantially increase the amount of shares of AMC Class A common stock in the public market and could reduce the market price of shares of AMC Class A common stock.
The pending acquisition of Odeon/UCI is subject to conditions, including certain conditions that may not be satisfied, and may not be completed on a timely basis, or at all.
Completion of the pending acquisition of Odeon/UCI conditioned upon antitrust clearance by the European Commission and the UK Competition and Markets Authority and is subject to consultation with the European Works Council.
If the acquisition is not completed on a timely basis, or at all, AMC's business could be adversely affected, and AMC will be subject to a number of risks, including the following:
- •
- time and resources committed by AMC's management to matters related to the pending acquisition (including integration and planning)
could otherwise have been devoted to pursuing other beneficial opportunities;
- •
- the market price of AMC Class A common stock could decline to the extent that the current market price reflects a market
assumption that the pending acquisition of Odeon/UCI will be completed; and
- •
- AMC will not realize any of the benefits expected from its completion.
The loss of benefits, or the increase in risks, could have an adverse effect on AMC's growth strategy and its business following the completion of the acquisition.
The debt that AMC expects to incur in connection with the merger and the potential acquisition of Odeon/UCI could adversely affect its financial position and make it more vulnerable to adverse economic conditions.
As of June 30, 2016, AMC had approximately $1,932.6 million of indebtedness outstanding. In connection with the merger and the potential acquisition of Odeon/UCI, AMC expects to incur approximately $1,300.0 million of additional indebtedness to pay a portion of the consideration for these transactions. This level of debt could have important consequences, such as:
- •
- limiting AMC's ability to obtain additional financing to fund its working capital, capital expenditures, debt service requirements,
potential growth or for other purposes;
- •
- increasing the cost of future borrowings by AMC;
- •
- limiting AMC's ability to use operating cash flow in other areas of its business or to pay dividends because it must dedicate a substantial portion of these funds to make payments on its debt;
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- •
- placing AMC at a competitive disadvantage compared to competitors with less debt; and
- •
- increasing AMC's vulnerability to adverse economic and industry conditions.
AMC's ability to service its debt will depend upon, among other things, its future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which will be beyond AMC's control. If AMC's operating results are not sufficient to service its indebtedness and any future indebtedness that it may incur, AMC will be forced to take actions, which may include reducing dividends, reducing or delaying its business activities, acquisitions, investments or capital expenditures, selling assets or seeking additional equity capital. AMC may not be able to effect any of these actions on satisfactory terms or at all.
In addition to reading the foregoing risk factors, you are urged to read "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 100 of this proxy statement/prospectus for a more complete discussion of the expected material U.S. federal income tax consequences of the merger and owning and disposing of AMC Class A common stock received in the merger.
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Carmike Cinemas, Inc.
1301 First Avenue
Columbus, Georgia 31901
Telephone: (706) 576-3400
Carmike Cinemas, Inc., a Delaware corporation, is a U.S. leader in digital cinema, 3-D cinema deployments and alternative programming and is one of the nation's largest motion picture exhibitors. As of October 5, 2016, Carmike had 271 theatres with 2,917 screens in 41 states. The circuit includes 55 premium large format (PLF) auditoriums featuring state-of-the-art technology and luxurious seating, including 32 "BigDs," 21 IMAX auditoriums and two MuviXL screens. As "America's Hometown Theatre Chain" Carmike's primary focus is mid-sized communities.
Carmike's common stock is listed on NASDAQ under the symbol "CKEC."
Carmike's principal executive offices are located at 1301 First Avenue, Columbus, Georgia 31901, its telephone number is (706) 576-3400 and its internet website address is www.carmike.com. The information provided on or accessible through Carmike's website, other than securities filings that are otherwise incorporated herein by reference, is not part of this proxy statement/prospectus and is not incorporated in this proxy statement/prospectus by this or any other reference to Carmike's website provided in this proxy statement/prospectus.
Detailed descriptions of Carmike's business and financial results are contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and its subsequent reports filed with the SEC, if any, which are incorporated in this proxy statement/prospectus by reference. See "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus.
AMC Entertainment Holdings, Inc.
One AMC Way
11500 Ash Street
Leawood, KS 66211
Telephone: (913) 213-2000
AMC Entertainment Holdings, Inc., a Delaware corporation, through its direct and indirect subsidiaries is principally involved in the theatrical exhibition business and owns, operates or has interests in 386 locations and 5,334 screens as of June 30, 2016, located primarily in the United States.
AMC's common stock is listed on the NYSE, under the symbol "AMC."
AMC's principal executive offices are located at One AMC Way, 11500 Ash Street, Leawood, KS 66211, its telephone number is (913) 213-2000 and its internet website address is www.acmtheatres.com. The information provided on or accessible through AMC's website, other than securities filings that are otherwise incorporated herein by reference, is not part of this proxy statement/prospectus and is not incorporated in this proxy statement/prospectus by this or any other reference to AMC's website provided in this proxy statement/prospectus.
On July 12, 2016, AMC entered into a Share Purchase Agreement, referred to as the "Share Purchase Agreement," with various other parties to acquire the film exhibition business of Odeon/UCI, for total consideration of (i) cash in the amount of GBP £375 million ($478.0 million), (ii) shares of AMC Class A common stock valued at GBP £125 million ($159.3 million), and (iii) the assumption of indebtedness of approximately GBP £475.8 million ($606.5 million) as of October 5, 2016. AMC will refinance the assumed indebtedness simultaneously with the closing of the transaction. The US Dollar amounts set forth above assume a Euro/USD exchange rate of 1.1204 and a GBP/USD exchange rate
50
of 1.2747 as of October 5, 2016. In connection with the transaction, AMC will make adjustments to conform Odeon/UCI financial statements to US GAAP. Those adjustments primarily include currency translation and the adjustment of certain operating leases to capital and financing lease obligations, with those obligations totaling approximately $280 million in additional debt.
The number of shares of Class A common stock delivered will be based on the volume weighted average price of the Class A common stock over the twenty consecutive trading days ending three business days before the closing of the transaction. Subject to certain exceptions, the shares may not be sold for a period of six months after closing and no more than 50% of the shares may be sold for a period of twelve months after closing. Subject to these restrictions and the limitations set forth in the Share Purchase Agreement, AMC has agreed to file a registration statement to allow the resell of the shares and has granted certain other piggy-back registration rights. AMC also agreed to certain other minority protections, including limitations on the amount of AMC's indebtedness, on the price at which AMC can issue Class A common stock and on amendments to its organizational documents. The closing of the Share Purchase Agreement is subject to antitrust clearance by the European Commission and the UK Competition and Markets Authority.
Odeon/UCI is a leading European cinema operator with 242 cinemas and 2,236 screens. Odeon/UCI operates in four major markets: the United Kingdom, Spain, Italy and Germany; and three smaller markets: Austria, Portugal, and Ireland. For the year ended December 31, 2015 and six months ended June 30, 2016, Odeon/UCI had revenues of $1,142,963,000, and $526,199,000 respectively (based on an average GBP/USD exchange rate of 1.5284 for the twelve months ended December 31, 2015 and 1.4326 for the six months ended June 30, 2016, respectively).
Detailed descriptions of AMC's business and financial results are contained in its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and its subsequent reports filed with the SEC, if any, which are incorporated in this proxy statement/prospectus by reference. Additional information related to AMC and Odeon/UCI, including financial statements or other information, may be included in future AMC filings with the SEC. AMC encourages you to review any such future filings. See "Where Stockholders Can Find More Information" beginning on page 164 of this proxy statement/prospectus.
Congress Merger Subsidiary, Inc.
One AMC Way
11500 Ash Street
Leawood, KS 66211
Telephone: (913) 213-2000
Congress Merger Subsidiary, Inc., an indirect wholly owned subsidiary of AMC, is a Delaware corporation that was formed on February 29, 2016 for the sole purpose of entering into the original merger agreement and the amended and restated merger agreement and completing the transactions contemplated by the amended and restated merger agreement, including the merger. Upon the terms and subject to the conditions of the amended and restated merger agreement, Merger Sub will be merged with and into Carmike, with Carmike surviving the merger as an indirect wholly owned subsidiary of AMC.
The principal executive offices of Merger Sub are located at One AMC Way, 11500 Ash Street, Leawood, KS 66211, and its telephone number is (913) 213-2000.
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This section contains information about the special meeting of Carmike's stockholders that has been called and is being reconvened to consider and vote upon a proposal to adopt the amended and restated merger agreement, a proposal to approve, by a non-binding advisory vote, the compensation arrangements disclosed in this proxy statement/prospectus that may be payable to Carmike's named executive officers in connection with the completion of the merger and a proposal to approve the adjournment of the special meeting from time to time if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the amended and restated merger agreement.
This proxy statement/prospectus is being provided to the stockholders of Carmike as part of a solicitation of proxies by the Carmike Board for use at the special meeting to be reconvened at the date, time and place specified below, and at any adjournment or postponement thereof, for the purposes set forth in this proxy statement/prospectus and in the accompanying notice of special meeting.
The special meeting of stockholders of Carmike is scheduled to be reconvened on November 15, 2016, at 10:00 a.m., local time, at the offices of King & Spalding LLP located at 1180 Peachtree Street, N.E., Atlanta, Georgia 30309. Carmike intends to mail this proxy statement/prospectus and the accompanying proxy card to its stockholders on or about [ · ], 2016.
Purpose of the Special Meeting
At the special meeting, stockholders will be asked:
- •
- to consider and vote upon a proposal to adopt the amended and restated merger agreement, approving the transactions contemplated
thereby, including the merger;
- •
- to consider and vote upon a proposal to approve, by a non-binding advisory vote, the compensation arrangements disclosed in this proxy
statement/prospectus that may be payable to Carmike's named executive officers in connection with the completion of the merger; and
- •
- to consider and vote upon a proposal to approve the adjournment of the special meeting from time to time if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the amended and restated merger agreement.
Recommendations of Carmike's Board of Directors
After considering various reasons to approve the amended and restated merger agreement, as well as certain countervailing factors, the Carmike Board members unanimously determined that the amended and restated merger agreement and transactions contemplated thereby, including the merger, are in the best interests of Carmike's stockholders and approved, adopted and declared advisable, the amended and restated merger agreement and the merger. Certain factors considered by the Carmike Board in reaching its decision to approve the amended and restated merger agreement and the merger can be found in "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Carmike's Reasons for the Merger" beginning on page 72 of this proxy statement/prospectus.
The Carmike Board of Directors recommends that Carmike stockholders vote:
- (1)
- "FOR" the merger proposal, approving the transactions contemplated thereby, including the
merger;
- (2)
- "FOR" the merger-related named executive officer compensation proposal; and
- (3)
- "FOR" the adjournment proposal.
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Record Date and Voting Information
Only holders of record of Carmike common stock at the close of business on September 27, 2016, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements thereof. Each holder of record of Carmike common stock on the record date will be entitled to one vote for each share held as of the record date on each matter submitted to Carmike stockholders for approval at the special meeting. If you sell or transfer your shares of Carmike common stock after the record date but before the special meeting, you will transfer the right to receive the per share merger consideration, if the merger is completed, to the person to whom you sell or transfer your shares of Carmike common stock, but you will retain your right to vote those shares at the special meeting.
As of the close of business on the record date, there were 24,388,587 shares of Carmike common stock issued, outstanding and entitled to vote at the special meeting, which shares were held by approximately 267 holders of record.
Nominees typically have the authority to vote on "routine" proposals when they have not received instructions from beneficial owners. Absent specific instructions from the beneficial owner of the shares, however, nominees are not allowed to exercise their voting discretion with respect to the approval of non-routine matters. At the special meeting, nominees do not have the authority to vote without instructions from the beneficial owner.
At the special meeting, stockholders holding a majority of the outstanding shares entitled to vote at the special meeting, represented in person or by proxy, will constitute a quorum. When a quorum is present to organize a meeting, it is not broken by the subsequent withdrawal of any such stockholders. As of the record date, 12,194,294 shares of Carmike common stock will be required to obtain a quorum. Abstentions and broker non-votes are considered as present for the purpose of determining the presence of a quorum. In the event that a quorum is not present, or if there are insufficient votes to adopt the amended and restated merger agreement at the time of the special meeting, it is expected the meeting will be adjourned to solicit additional proxies.
Required Vote; Effect of Abstentions and Broker Non-Votes
Adoption of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Carmike common stock entitled to vote at the special meeting. Assuming a quorum is present, approval of each of the merger-related named executive officer compensation proposal and the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote at the meeting. Approval of the adjournment proposal (if no quorum is present) will require the affirmative vote of the holders of a majority of the shares of Carmike common stock that are present in person or by proxy and entitled to vote on such matter. Under Carmike's by-laws, the presiding officer of the special meeting and the Chief Executive Officer of Carmike each also have the independent authority to adjourn the special meeting regardless of the outcome of the vote on the adjournment proposal.
Abstentions will have the same effect as votes "AGAINST" the merger proposal, the merger-related named executive officer compensation proposal and the adjournment proposal.
Shares not in attendance will have no effect on the outcome of any vote on the merger-related named executive officer compensation proposal and the adjournment proposal, but will have the same effect as votes "AGAINST" the merger proposal.
If you hold your shares through a nominee and do not instruct your nominee on how you wish your shares of Carmike common stock to be voted using the voting instruction form provided by your
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nominee, your Nominee may not vote uninstructed shares on the merger proposal, the merger-related named executive officer compensation proposal or the adjournment proposal. If such failure to instruct your nominee on any matter results in a "broker non-vote," these "broker non-votes" will be counted as votes "AGAINST" the merger proposal, the merger-related named executive officer compensation proposal and the adjournment proposal (if a quorum is present). "Broker non-votes" will have no effect on the adjournment proposal (if no quorum is present).
It is important that you vote your shares. Under the DGCL, the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Carmike common stock entitled to vote at the special meeting and your abstaining from voting, failure to vote, or failure to instruct your nominee to vote, will have the same effect as a vote "AGAINST" the merger proposal.
If the special meeting is adjourned or postponed for any reason, at any subsequent reconvening of the special meeting, all proxies will be voted in the same manner as they would have been voted at the original convening of the special meeting, except for any proxies that have been revoked or withdrawn in the interim.
After carefully reading and considering the information contained in this proxy statement/prospectus, each stockholder of record of Carmike common stock (that is, if your shares of Carmike common stock are registered in your name with its transfer agent, American Stock Transfer & Trust Company) should grant a proxy to vote by mail, through the internet, or by telephone or attend the special meeting in person and vote by ballot, according to the instructions described below. Each beneficial owner of Carmike common stock (that is, if your shares of Carmike common stock are held in "street name" through a nominee) should vote by directing your nominee how to vote your shares.
Voting Methods
For Stockholders of Record:
If your shares are held in your name on the records of Carmike's transfer agent, American Stock Transfer & Trust Company, you can vote:
- •
- Via the Internet—If you choose to grant a proxy via the internet, go to
the website indicated on the enclosed proxy card and follow the easy instructions. You will need the control number shown on your proxy card in order to vote;
- •
- Via Telephone—If you choose to grant a proxy via telephone, use a
touch-tone telephone to call the phone number indicated on the enclosed proxy card and follow the easy voice prompts. You will need the control number shown on your proxy card in order to vote;
- •
- Via Mail—If you choose to grant a proxy via mail, simply mark your proxy
card, date and sign it, and return it in the postage-paid envelope provided. Proxy cards that are returned without a signature will not be counted as present at the special meeting and cannot be
voted; or
- •
- At the Special Meeting—Stockholders of record who attend the special meeting may vote in person by filling out a ballot at the meeting, and any previously submitted proxies will be revoked by the vote cast at the special meeting.
Whether or not you plan to attend the special meeting in person, please complete, sign, date and return the enclosed proxy card or submit your proxy via the internet or by telephone prior to the special meeting to ensure that your shares will be voted at the special meeting. Proxies received at any time before the special meeting and not expired, revoked or superseded before being voted will be
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voted at the special meeting. If the proxy contains instructions on how to vote, it will be voted in accordance with the instructions. If no instruction is indicated, the proxy will be voted:
(1) "FOR" the merger proposal, voting such shares in favor of approving the transactions contemplated thereby, including the merger;
(2) "FOR" the merger-related named executive officer compensation proposal; and
(3) "FOR" the adjournment proposal.
YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD, AND YOU SHOULD NOT FORWARD YOUR STOCK CERTIFICATES TO THE EXCHANGE AGENT WITHOUT A FORM OF ELECTION.
For Beneficial Owners:
If your shares are held in "street name" through a nominee, you have the right to direct your nominee on how to vote your shares. Because a beneficial owner is not the stockholder of record, you may not vote these shares at the special meeting unless you obtain a "legal proxy" from the nominee that holds your shares, giving you the right to vote the shares at the special meeting.
Shares Acquired After Original Record Date
Any proxies previously delivered by a stockholder of record on the record date, including by delivery of the original proxy card, will be deemed to cover the number of shares you own on the record date even if that number is more than or less than the number of shares you owned on the original record date. If you held shares in "street name" through a nominee on the original record date and continue to own such shares at that nominee, and have already provided voting instructions with respect to such shares, such shares will be voted as directed by such voting instructions and you do not need to take any action, unless you wish to revoke or change such voting instructions. Such previously delivered voting instructions will be deemed to cover the number of shares you own on the record date, even if that number is more than or less than the number of shares you owned on the original record date. If you held shares in "street name" through a nominee on the original record date, but have acquired shares after the original record date, and you are the stockholder of record of those newly acquired shares, then, whether or not you previously gave a voting instruction with respect to the shares that you held on the original record date, those newly acquired shares will not be voted unless you give a proxy with respect to those shares by completing, signing, dating and returning the enclosed proxy card or by following the instructions on the enclosed proxy card for Internet or telephone submissions or you attend the special meeting and vote in person.
Carmike stockholders of record retain the power to revoke their proxy or change their vote, even if they have already submitted a proxy in connection with the original merger agreement, and even if they sign the proxy card in the form accompanying this proxy statement/prospectus, vote via the internet or vote via telephone. Carmike stockholders can revoke their proxy at any time before it is exercised by giving written notice to the Corporate Secretary at Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attn: Corporate Secretary, specifying such revocation. Carmike stockholders may also change their vote by timely delivering to Carmike a valid, later-dated proxy or by voting by ballot in person at the special meeting. Simply attending the special meeting will not constitute revocation of your proxy. If your shares are held in "street name" through a nominee, you should follow the instructions of such nominee regarding the revocation of voting instructions. If you have voted via the internet or via telephone, you may change your vote by signing on to the website and following the prompts or calling the toll-free number again and following the instructions.
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Voting by Carmike's Directors and Executive Officers as to the Merger Proposal
At the close of business on the record date, directors and executive officers of Carmike and their affiliates owned, in the aggregate, 589,860 shares of Carmike common stock which they are entitled to vote at the special meeting, representing approximately 2.42% of the shares of Carmike common stock outstanding on that date and entitled to vote at the special meeting. It is expected that Carmike's directors and executive officers will vote their shares in favor of each of the proposals, although none of them have entered into any agreement obligating them to do so.
Certain directors and executive officers of Carmike have interests as to the merger proposal that are different from, or in addition to, those of other Carmike stockholders generally. For more information, see "Proposal 1—Adoption of the Amended and Restated Merger Agreement—Interests of Certain Persons in the Merger" beginning on page 86 of this proxy statement/prospectus.
Expenses of Proxy Solicitation
This proxy statement/prospectus is being furnished in connection with the solicitation of proxies by the Carmike Board. Expenses incurred in connection with printing and mailing of this proxy statement/prospectus are Carmike's responsibility. Carmike has engaged the services of Innisfree M&A Incorporated to solicit proxies for the special meeting. In connection with its retention by Carmike, Innisfree M&A Incorporated has agreed to provide consulting, analytic and proxy solicitation services in connection with the special meeting. Carmike has agreed to pay Innisfree M&A Incorporated a fee of approximately $25,000, plus reasonable out-of-pocket expenses for its services, and Carmike will indemnify Innisfree M&A Incorporated for certain losses arising out of its proxy solicitation services. Copies of solicitation materials will also be furnished to banks, brokerage houses, fiduciaries and custodians holding shares of Carmike common stock in their names that are beneficially owned by others to forward to those beneficial owners. Carmike may reimburse persons representing beneficial owners of its common stock for their costs of forwarding solicitation materials to the beneficial owners. In addition to the solicitation of proxies by mail, proxies may be solicited by Carmike directors, officers and employees, or representatives of Innisfree M&A Incorporated, in person or by telephone, email, fax or other means of communication and Carmike may pay persons holding shares for others their expenses for sending proxy materials to their principals. No additional compensation will be paid to Carmike directors, officers or employees for their services.
The SEC permits companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single proxy statement/prospectus or annual report on Form 10-K, as applicable, addressed to those stockholders. This process, which is commonly referred to as "householding," potentially means extra convenience for stockholders and cost savings for companies. Stockholders who hold their shares through a nominee, such as a broker, bank, broker-dealer or similar organization may receive notice from that nominee regarding the householding of proxy materials. As indicated in the notice, a single proxy statement/prospectus will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from an affected stockholder. Once a stockholder has received notice that a nominee will be householding, householding will continue until the stockholder is notified otherwise or until the stockholder has revoked consent by notifying the nominee. If you would prefer to receive separate copies of a proxy statement/prospectus for other stockholders in your household, either now or in the future, please contact your nominee. Upon written or oral request to the Carmike Corporate Secretary at Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, (706) 576-3400, Carmike will promptly provide separate copies of this proxy statement/prospectus.
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All votes will be tabulated by a representative of American Stock Transfer & Trust Company, who will act as the inspector of election appointed for the special meeting and will separately tabulate affirmative and negative votes, abstentions and broker non-votes.
Adjournments and Postponements
In addition to the merger proposal and the merger-related named executive officer compensation proposal, Carmike stockholders are also being asked to approve a proposal that will allow for the adjournment of the special meeting from time to time if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt the amended and restated merger agreement, to allow reasonable additional time for the filing and distribution of any necessary supplemental or amended disclosure to be disseminated to and reviewed by Carmike stockholders prior to the special meeting, or as otherwise required by applicable law or with the consent of AMC. In addition, the Carmike Board could adjourn and postpone the meeting in the case of any of the circumstances described above. If the special meeting is adjourned for the purpose of soliciting additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you submit a proxy and do not indicate how you wish to vote on any proposal, or if you indicate that you wish to vote in favor of the merger proposal but do not indicate a choice on the adjournment proposal, your shares will be voted in favor of the adjournment proposal. Under Carmike's by-laws, the presiding officer of the special meeting and the Chief Executive Officer of Carmike each also have the independent authority to adjourn the special meeting regardless of the outcome of the vote on the adjournment proposal.
Any adjournment may be made without notice to another time or place if the date, time and place to which the meeting is adjourned is announced at the meeting at which the adjournment is taken. At the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. However, if the adjournment is for more than 30 days or, if after the adjournment, the Carmike Board fixes a new record date for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the adjourned meeting.
Only stockholders of record as of the close of business on September 27, 2016, the record date for the reconvened special meeting or their duly appointed proxies, and "street name" holders (those whose shares are held through a nominee) who bring evidence of beneficial ownership on the record date for the special meeting, such as a copy of your account statement or similar evidence of ownership of Carmike common stock as of the record date for the special meeting, may attend the special meeting. If you are a "street name" holder and you wish to vote at the special meeting, you must also bring a "legal proxy" from the record holder (your nominee) of the shares of Carmike common stock authorizing you to vote at the special meeting. All stockholders should bring photo identification (a driver's license or passport is preferred), as you will also be asked to provide photo identification at the registration desk on the day of the special meeting or any adjournment or postponement of the special meeting. Everyone who attends the special meeting must abide by the rules for the conduct of the meeting. These rules will be printed on the meeting agenda. Even if you plan to attend the special meeting, you are encouraged to grant a proxy to vote by the internet, telephone or mail so that your vote will be counted if you later decide not to attend the special meeting. No cameras, recording equipment, other electronic devices, large bags or packages will be permitted in the special meeting. Stockholders will be admitted to the meeting room starting at 9:30 a.m., local time, and admission will be on a first-come, first-served basis.
If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact Innisfree M&A Incorporated by telephone toll-free at (888) 750-5834. Banks and brokers may call collect at (212) 750-5833.
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PROPOSAL 1—ADOPTION OF THE AMENDED AND RESTATED MERGER AGREEMENT
Pursuant to the terms of the amended and restated merger agreement, if the amended and restated merger agreement is adopted by Carmike's stockholders and the other conditions to the closing are either satisfied or waived, at the effective time of the merger, Merger Sub will be merged with and into Carmike, with Carmike surviving the merger as an indirect wholly owned subsidiary of AMC. As a result of the merger, Carmike will cease to be listed on NASDAQ and price and quotations will no longer be available for Carmike common stock.
At the effective time of the merger, each share of Carmike common stock issued and outstanding immediately prior to such time (other than the shares of Carmike common stock held by Carmike as treasury stock, or owned by subsidiaries of Carmike or by AMC, Merger Sub or any of their subsidiaries, or held by stockholders who are entitled to demand and have properly demanded appraisal for such shares in accordance with, and who comply in all respects with, Section 262 of the DGCL), will be converted into the right to receive, at the election of the holder, (i) $33.06 in cash, without interest or (ii) 1.0819 shares of AMC Class A common stock, and less any applicable withholding taxes, subject to proration so that 70% of the total shares held by all Carmike stockholders are converted into cash and 30% of the total shares held by all Carmike stockholders are converted into shares of AMC Class A common stock. If the aggregate number of shares of AMC Class A common stock that a holder of Carmike common stock would be entitled to receive as part of the merger consideration includes a fraction of a share of AMC Class A common stock, the holder will receive cash in lieu of that fractional share. The merger consideration, including the exchange ratio used to calculate the stock consideration, is fixed and the number of shares of AMC Class A common stock will not be adjusted to reflect stock price changes prior to the closing of the merger. Because elections are subject to proration as described above, you may receive some shares of AMC Class A common stock, rather than cash, even if you elected to receive cash with respect to all of your shares of Carmike common stock (and vice versa).
At least seven days prior to the effective time of the merger, each outstanding Carmike stock option, whether or not vested or exercisable, will, contingent upon the consummation of the merger, become 100% vested and exercisable. Each share of Carmike common stock received in connection with the exercise of Carmike stock options will be entitled to receive the merger consideration, plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, subject to the terms of the amended and restated merger agreement. To the extent not exercised, each outstanding Carmike stock option will, at the effective time, be cancelled automatically, and Carmike will pay each holder of such cancelled Carmike stock option an amount in cash (less any applicable tax withholdings), determined by multiplying (x) the excess, if any, of $33.06 over the exercise price per share of Carmike common stock subject to such Carmike stock option by (y) the number of shares of Carmike common stock subject to such Carmike stock option. Notwithstanding the foregoing, if the per share exercise price payable with respect to a Carmike stock option exceeds the cash consideration, then such Carmike stock option will be cancelled without payment of any consideration with respect thereto.
In addition, immediately prior to the effective time of the merger:
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- each share of Carmike restricted stock that is then outstanding, whether or not vested, will, contingent upon consummation of the merger, become 100% vested and all outstanding issuance and forfeiture conditions will be deemed 100% satisfied, and the holders of such shares will be entitled to receive the merger consideration, plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, subject to the terms of the amended and restated merger agreement;
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- •
- each award of Carmike restricted stock units that is then outstanding, whether or not vested, will, contingent upon consummation of
the merger, become 100% vested and all outstanding issuance and forfeiture conditions will be deemed 100% satisfied, and Carmike will with respect to the holder of any such Carmike restricted stock
units (1) issue the number of shares of Carmike common stock underlying such Carmike restricted stock units, which shares will be entitled to receive the merger consideration, plus any
dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, in accordance with the
amended and restated merger agreement, and (2) pay in cash all dividend equivalents, if any, accrued but unpaid as of the effective time with respect to the number of shares of Carmike common
stock underlying such Carmike restricted stock units; and
- •
- each award of Carmike performance shares that is then outstanding, whether or not vested, or whether or not performance criteria have been achieved, will, contingent upon consummation of the merger, become 100% vested and all outstanding issuance and forfeiture conditions will be deemed 100% satisfied with respect to (1) the actual number of shares of Carmike common stock earned for each performance period completed prior to the effective time of the merger, as determined by Carmike prior to the effective time of the merger in accordance with the terms of the applicable award agreements and the Carmike stock plans in existence as of the effective date of the original merger agreement, and (2) the number of shares of Carmike common stock equal to the specified number of target shares for any performance period during which the effective time of the merger occurs and for each succeeding performance period covered by such Carmike performance shares, and the holders of such shares will be entitled to receive the merger consideration, plus any dividends or distributions to which holders of Carmike common stock are entitled in respect of AMC Class A common stock for any record date after the effective time, in accordance with the amended and restated merger agreement.
At the effective time of the merger, the certificate of incorporation and the by-laws of Carmike, referred to as the "by-laws" in this proxy statement/prospectus, will be amended in their entirety to be in the forms set forth as exhibits to the amended and restated merger agreement until thereafter changed or amended as provided therein or by applicable law. In addition, as of the effective time of the merger, the directors of Merger Sub immediately prior to the effective time will become the directors of the surviving corporation until their successors have been duly elected and qualified or until their earlier death, resignation or removal in accordance with by-laws of the surviving corporation. The officers of Merger Sub immediately prior to the effective time will be the initial officers of the surviving corporation until their successors have been duly elected and qualified or until their earlier death, resignation or removal.
Carmike's Board and senior management regularly review and assess Carmike's business, operations and financial performance, including Carmike's capital allocation strategy and potential opportunities to maximize stockholder value through acquisitions, business combinations, and other strategic and financial transactions. As part of this assessment, Carmike regularly engages in discussions with third parties regarding potential transactions. Over the course of Carmike's last three fiscal years, Carmike has engaged in a significant number of theatre acquisitions and acquired over 40 theatres (with approximately 470 screens) to grow its business.
The Carmike Board and senior management also regularly review and assess industry trends and market conditions as they may impact Carmike's long-term strategic goals and plans. In recent years, the Carmike Board and Carmike's senior management have considered a variety of industry trends, including trends relating to industry consolidation, in-theatre dining, increased investment by theatre
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exhibitors in areas such as remodeling of theatres, luxury reseating and expanded concession offerings and film release windows.
In May 2014, at the request of Mr. Gerry Lopez, the then President and Chief Executive Officer of AMC, Mr. David Passman, Carmike's President and Chief Executive Officer and Mr. Richard Hare, Carmike's Senior Vice President—Finance, Treasurer and Chief Financial Officer met with Mr. Lopez and Mr. Craig Ramsey, AMC's Executive Vice President and Chief Financial Officer. At the meeting, AMC proposed engaging in discussions regarding a potential transaction in which AMC would acquire Carmike in exchange for cash and stock merger consideration.
At a Carmike Board meeting in late May 2014, Carmike's senior management discussed with the Carmike Board the meeting with AMC's senior management. After discussion, the Carmike Board determined not to engage in any discussions at that time regarding a potential transaction with AMC in light of Carmike's then pending transaction to acquire Digital Cinema Destinations Corp., referred to as "Digiplex."
Following the closing of the Digiplex transaction in August 2014, AMC's senior management contacted Carmike's senior management and proposed that AMC and Carmike engage in discussions regarding a potential transaction. The Carmike Board met on August 27, 2014 to discuss this proposal. Although the Carmike Board did not make any decision at this meeting regarding Carmike's strategic alternatives, it authorized Carmike to enter into a confidentiality agreement with AMC, and provide due diligence to, and discuss the terms of a potential transaction with, AMC. The Carmike Board also authorized the Board's Executive Committee to approve the engagement of J.P. Morgan as Carmike's financial advisor. The Carmike Board and the Board's Executive Committee authorized Carmike to engage J.P. Morgan on the basis of, among other things, J.P. Morgan's experience and its qualifications and reputation in connection with providing strategic and financial advisor services and its familiarity with Carmike and the industries in which it operates.
During September 2014, Carmike negotiated a confidentiality agreement with AMC and also discussed with AMC the scope of a potential due diligence process.
In October 2014, following approval by the Carmike Board's Executive Committee, Carmike engaged J.P. Morgan as its financial advisor and executed an engagement letter with J.P. Morgan. Also during October 2014, Carmike entered into a confidentiality agreement with AMC.
During the remainder of 2014, Carmike and AMC engaged in due diligence and discussed the terms of a potential transaction. During the course of these discussions, AMC proposed to acquire Carmike for $35.00 per share, with 50% of the merger consideration to be paid in cash, and the remaining 50% of the merger consideration paid in AMC stock. In addition, among other matters, AMC and Carmike discussed how the exchange ratio would be determined, the Carmike termination fee that would be payable if Carmike pursued another transaction and the AMC reverse termination fee that would be payable if the regulatory conditions were not satisfied, AMC's financing commitments, the conditions to closing a potential transaction, and the efforts AMC and Carmike would be required to take to obtain the necessary regulatory approvals for the transaction. Throughout the process, the Carmike Board was actively involved in overseeing these discussions.
In December 2014, representatives of King & Spalding LLP, Carmike's outside legal counsel, referred to as "King & Spalding," updated the Carmike Board on its fiduciary duties applicable to its consideration of Carmike's strategic alternatives, including a potential sale of Carmike. The Carmike Board also reviewed a list of other potential strategic buyers prepared by representatives of J.P. Morgan. The Carmike Board discussed with Carmike's senior management and representatives of J.P. Morgan whether any other potential strategic buyers would likely be interested in, and financially capable of, consummating a business combination with Carmike. After discussion, the Carmike Board determined that Party A, Party B, Party C, and Party D, each of which was a potential strategic buyer,
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could be interested in, and financially capable of, consummating a potential business combination with Carmike, and authorized Carmike's management and J.P. Morgan to solicit interest from such Parties regarding a potential transaction.
Also during this period, the Carmike Board discussed with Carmike's senior management and representatives of J.P. Morgan whether any potential financial buyer would be interested in a potential business combination with Carmike. After discussion, the Carmike Board determined that, in light of the leverage that would likely be required in connection with a sale of Carmike to a potential financial buyer, the lack of synergies available to a potential financial buyer, and the likely required investment returns that would be sought by a potential financial buyer, a sale of Carmike to a potential financial buyer was not expected to maximize stockholder value as compared to a potential transaction with AMC or another potential strategic buyer.
Accordingly, during December 2014 and January 2015, representatives of J.P. Morgan, with the authorization of the Carmike Board, contacted two U.S. strategic buyers (Party A and Party B) and two non-U.S. strategic buyers (Party C and Party D) to determine their interest in a potential business combination with Carmike. During this period, representatives of J.P. Morgan, with the authorization of the Carmike Board, also contacted Party E, a potential non-U.S. strategic buyer, to determine whether Party E was interested in pursuing a potential business combination with Carmike. Each of Party B, Party C, Party D and Party E declined to execute a confidentiality agreement, and they each informed representatives of J.P. Morgan that they were not interested in pursuing a potential business combination with Carmike either because they did not believe Carmike's business would be a strategic fit for their respective businesses or because they were pursuing other long-term acquisition or strategic alternatives. Carmike entered into a confidentiality agreement with Party A, which confidentiality agreement did not contain any "standstill" restriction that would prevent Party A from making a proposal to acquire Carmike if Carmike entered into a definitive agreement with respect to a change of control transaction with another party. Following the execution of the confidentiality agreement, Carmike provided Party A with access to a data room containing financial and other information regarding Carmike. Subsequently, Party A informed representatives of J.P. Morgan that it was not interested in pursuing a potential business combination with Carmike because a transaction did not align with Party A's strategic priorities at that time.
During the first quarter of 2015, Carmike and AMC continued due diligence and discussions regarding the terms of a potential transaction, including discussions regarding the amount and form of consideration and how the exchange ratio would be determined. During the course of these discussions, AMC proposed to acquire Carmike for $36.00 per share, with 50% of the merger consideration to be paid in cash, and the remaining 50% of the merger consideration paid in AMC stock. Subsequent to this proposal, the parties discussed a potential transaction in which AMC would acquire Carmike for $37.00 per share, with 60% of the merger consideration to be paid in cash, and the remaining 40% of the merger consideration paid in AMC stock. For illustrative purposes only, the $37.00 price represented a premium of approximately 19.2% to the $31.03 closing price per share of the Carmike common stock on March 12, 2015 (the day preceding the Reuters report described below) and a premium of approximately 21.7% to the volume weighted average price of the Carmike common stock over the 30 days ended March 12, 2015.
In addition, during the course of these discussions, the parties discussed the Carmike termination fee and the AMC reverse termination fee that would be payable in a potential transaction, AMC's financing commitments, the conditions to closing a potential transaction, and the efforts AMC and Carmike would be required to take to obtain the necessary regulatory approvals for the transaction. With respect to the termination fees, the parties were negotiating a fee in the range of approximately 2.5% to 3.8% of the equity value of the transaction. In addition, the parties were negotiating a reverse termination fee in the range of $45 million to $50 million, which would be paid by AMC to Carmike in certain circumstances where regulatory approval was not obtained. AMC also indicated that it was
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prepared to make divestitures of theatre and non-theatre assets up to certain thresholds to obtain the necessary regulatory approvals.
On March 13, 2015, Reuters published a report stating, among other matters, that Carmike had hired J.P. Morgan as its financial advisor to help Carmike explore strategic alternatives, including a potential sale of Carmike.
Throughout the first quarter of 2015, the Carmike Board was actively involved in overseeing these discussions. In addition, in this period the Carmike Board reviewed and discussed with Carmike's senior management and representatives of J.P. Morgan Carmike's February 2015 Projections (as defined below under "—Certain Projections Prepared by the Management of Carmike").
On April 10, 2015, AMC notified Carmike that it was no longer interested in pursuing the transaction. AMC indicated that over time its management and board grew increasingly less comfortable with the terms of the transaction.
Following the withdrawal of AMC's interest, the Carmike Board and senior management continued to focus on Carmike's business, operations and financial performance, including Carmike's theatre acquisition strategy, its capital allocation strategy and its strategy to make investments in existing theatres.
On July 21, 2015, AMC announced that Mr. Lopez was stepping down as President and Chief Executive Officer of AMC effective August 6, 2015. Following this announcement, AMC undertook a search for a new Chief Executive Officer.
In October 2015, Carmike announced its acquisition of Sundance Cinemas, LLC, which included the acquisition of five theatres and 37 screens in Los Angeles, San Francisco, Houston, Seattle and Madison.
At an industry conference in December 2015, members of Carmike's senior management received inquiries from three financial sponsors. One such inquiry concerned Carmike's interest in a "private investment in public equity" (PIPE) transaction or investment in Carmike, with the other two inquiries concerning Carmike's interest in a "going private" leveraged transaction. Carmike's senior management reported these inquiries to the Carmike Board.
In early December 2015, Mr. Gary Suter, AMC's Senior Vice President—Purchasing & Strategic Initiatives, contacted Mr. Dan Ellis, Carmike's Senior Vice President, General Counsel and Secretary, to request a meeting with Mr. Ellis to discuss the process that AMC and Carmike had undertaken earlier in the year. On December 10, 2015, Carmike's senior management informed the Carmike Board that AMC had contacted Carmike. After discussion, the Carmike Board authorized Mr. Ellis to meet with AMC, which meeting was scheduled for January 6, 2016.
During the fourth quarter of 2015, the Carmike Board continued to review Carmike's capital allocation strategy and evaluated a potential share repurchase program in view of the then trading price of Carmike's common stock. On December 10, 2015, Carmike announced that the Carmike Board authorized a $50 million share repurchase program. In approving this share repurchase program, the Carmike Board, among other considerations, reviewed and discussed with Carmike's senior management Carmike's December 2015 Projections (as defined below under "—Certain Projections Prepared by the Management of Carmike").
On December 14, 2015, AMC announced that its Board of Directors appointed Mr. Adam M. Aron as the Chief Executive Officer and President of AMC, effective as of January 4, 2016.
On January 6, 2016, Mr. Ellis met with Mr. Suter. At the meeting, Mr. Suter asked whether Carmike would be receptive to discussing a potential transaction in which AMC would acquire Carmike. On January 7, 2016, Mr. Aron called Mr. Passman to further inquire regarding Carmike's
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interest in a potential transaction. No specific transaction terms were discussed by Carmike's senior management or AMC's senior management during the meeting on January 6, 2016 or discussion on January 7, 2016. Carmike's senior management reported on these developments to the Carmike Board's Executive Committee and Compensation and Nominating Committee on January 14, 2016. The Carmike Board's Executive Committee authorized Carmike's senior management to further discuss a potential transaction with AMC's senior management.
On January 20, 2016, Mr. Aron and other members of AMC's senior management met with Mr. Passman and other members of Carmike's senior management. At the meeting, AMC's senior management discussed with Carmike's senior management AMC's potential timeline and diligence process to complete a transaction and other issues regarding a potential transaction. Also at the meeting, AMC's senior management suggested a transaction in which AMC would acquire Carmike for a purchase price of $26.00 per share, which consideration would be payable in cash and shares of AMC Class A common stock. Carmike's senior management noted that the parties had previously discussed in the first quarter of 2015 a price of $37.00 per share. Following discussion, AMC's senior management stated that they would give consideration to increasing AMC's proposed purchase price to a number in the range of $26.00 to $30.00 per share. Carmike's senior management did not agree to any transaction terms at the meeting and informed AMC's senior management that they would discuss with Carmike's Board any specific proposal from AMC to acquire Carmike. AMC's senior management informed Carmike's senior management that AMC expected to send Carmike a preliminary proposal regarding a transaction once AMC had received additional diligence information (including diligence material regarding the results of operations of Carmike's fourth quarter of fiscal 2015).
On January 25, 2016, the Carmike Board's Executive Committee met to discuss the meeting with AMC's senior management that took place on January 20, 2016. At the meeting, the Carmike Board's Executive Committee authorized Carmike's senior management to enter into an extension to Carmike's confidentiality agreement with AMC and to provide AMC with additional diligence material. Also at the meeting, the Carmike Board's Executive Committee agreed to schedule a board meeting to further discuss a potential transaction with AMC.
On January 26, 2016, Carmike entered into an extension to its confidentiality agreement with AMC, and Carmike thereafter provided AMC with additional diligence material.
On January 28, 2016, the Carmike Board held a special meeting which members of Carmike's senior management and representatives of J.P. Morgan and King & Spalding also attended. At the meeting, the Carmike Board reviewed the discussions Carmike's senior management had with AMC's senior management regarding a potential transaction. At the meeting, Carmike's senior management noted that it was expecting a proposal from AMC during the week of February 1, 2016. The Carmike Board also considered the advantages and disadvantages of approaching other potential bidders to determine if there were any other parties that would likely be interested in, and financially capable of, consummating a potential transaction with Carmike. Following discussion, the Carmike Board determined to further consider a potential transaction with AMC once Carmike had received the expected proposal from AMC.
On February 1, 2016, Mr. Aron contacted Mr. Passman and proposed a potential transaction in which AMC would acquire Carmike for a purchase price in the range of $28.00 to $29.00 per share. Mr. Passman informed Mr. Aron that he did not believe the Carmike Board would be supportive of a transaction in that price range. During the week of February 1, 2016, Carmike's senior management continued to discuss a potential transaction with AMC's senior management, including discussions regarding price, form of consideration, the efforts AMC and Carmike would take to obtain the necessary regulatory approvals for a transaction, the size of the AMC termination fee payable if regulatory approval were not obtained, and the size of the Carmike termination fee payable if Carmike were to accept a superior proposal.
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On February 5, 2016, after further discussion, Mr. Aron contacted Mr. Passman and proposed a transaction in which AMC would acquire Carmike for a price of $30.00 per share in an all cash transaction. Mr. Aron noted that AMC's proposed purchase price of $30.00 per share may be slightly reduced by AMC following further discussions with the AMC Board. Mr. Aron also discussed with Mr. Passman AMC's potential timeline and diligence process to complete a transaction and other issues regarding a potential transaction, including the efforts that AMC and Carmike would take to obtain the necessary regulatory approvals for a transaction and the size of the AMC termination fee payable if regulatory approval were not obtained. Mr. Passman noted that he would discuss AMC's proposal with the Carmike Board.
On February 8, 2016, the Carmike Board held a special meeting. Members of Carmike's senior management and representatives of J.P. Morgan and King & Spalding were present at the meeting. At the meeting, the Carmike Board discussed AMC's proposal with Carmike's senior management and representatives of J.P. Morgan and King & Spalding. The Carmike Board also considered the advantages and disadvantages of approaching other potential bidders to determine if there were any other parties that would likely be interested in, and financially capable of, consummating a potential transaction with Carmike. Following discussion, the Carmike Board authorized Carmike's senior management to continue discussions with AMC's senior management regarding a potential transaction, including to engage in negotiations regarding the terms of a merger agreement, and also instructed representatives of J.P. Morgan to prepare a list of other potential buyers that would likely be interested in a transaction with Carmike. On February 10, 2016, King & Spalding provided a draft merger agreement to AMC's counsel, Husch Blackwell LLP, referred to as "Husch Blackwell," and AMC, Carmike, King & Spalding and Husch Blackwell thereafter negotiated the terms of the draft merger agreement. During these negotiations, the parties settled upon a termination fee of $30 million, which would be payable by Carmike to AMC in certain circumstances where the merger agreement was terminated. AMC also indicated it was prepared to agree to requirements satisfactory to Carmike related to AMC's efforts to obtain the necessary regulatory approvals for a transaction and the parties settled upon a $50 million termination fee payable by AMC in certain circumstances if regulatory approval was not obtained.
On February 15, 2016, the Carmike Board held a special meeting. Members of Carmike's senior management and representatives of J.P. Morgan and King & Spalding were present at the meeting. At the meeting, representatives of King & Spalding updated the Carmike Board on its fiduciary duties applicable to its consideration of Carmike's strategic alternatives, including a potential sale of Carmike.
During the meeting, the Carmike Board reviewed and discussed the terms of AMC's proposal and AMC's plans to finance the transaction. King & Spalding also discussed with the Carmike Board its analysis of antitrust matters related to the proposed transaction, including the regulatory approval process and timing considerations. King & Spalding also discussed the commitments AMC was prepared to make to obtain regulatory approval and the AMC termination fee payable if regulatory approval was not obtained.
The Carmike Board also reviewed and discussed with Carmike's senior management Carmike's performance during the fourth quarter of 2015, as well as Carmike's updated financial projections, referred to as the "February 2016 Projections" (see below under "—Certain Projections Prepared by the Management of Carmike"). In reviewing the February 2016 Projections, Carmike's senior management noted a key difference between Carmike's prior 2015 projections and the February 2016 Projections was that the February 2016 Projections were affected by the fact that the level of theatre acquisition activity by Carmike in 2015 was lower than had been projected. The Carmike Board also reviewed Carmike's growth strategy, including its new theatre development plans and the potential growth opportunities available to Carmike through its theatre acquisition strategy, as well as initiatives such as expansion of in-theatre dining, remodeling of theatres, luxury reseating and expanded concession offerings. As part of this review, the Carmike Board considered the opportunities, challenges and risks associated with
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executing Carmike's growth strategy, including Carmike's resources and positioning relative to larger competitors, as well as the uncertainties inherent in its new development and theatre acquisition strategy and uncertainties presented by other industry trends.
In addition, representatives of J.P. Morgan reviewed with the Carmike Board the financial terms of the offer from AMC. Also at the Carmike Board meeting, representatives of J.P. Morgan reviewed and discussed with the Carmike Board and Carmike's senior management a list of potential strategic buyers. The Carmike Board discussed with Carmike's senior management and representatives of J.P. Morgan whether any other potential strategic or financial buyers would likely be interested in, and financially capable of, consummating a business combination with Carmike. Also as part of this discussion, the Carmike Board discussed with Carmike's senior management and representatives of J.P. Morgan the inquiries Carmike's senior management received at the industry conference in December 2015. Representatives of J.P. Morgan also noted that, with the exception of AMC and the other two largest strategic companies in the industry, U.S. strategic buyers were unlikely to be financially capable of consummating an acquisition of Carmike. Representatives of J.P. Morgan also noted that potential non-U.S. strategic buyers (including Party C, Party D and Party E) were unlikely to be interested in an acquisition of Carmike given their respective other strategic priorities and the challenges presented by current exchange rates.
In connection with this discussion, the Carmike Board noted the contacts previously made with potential buyers and the lack of interest expressed by potential buyers at that time. Following discussion, the Carmike Board instructed representatives of J.P. Morgan to contact Party A and Party B, to determine if they were interested in potentially acquiring Carmike. Also at the meeting, the Carmike Board reviewed and discussed with representatives of J.P. Morgan the absence of business relationships of J.P. Morgan with AMC and its controlling stockholder, as well as Party A. The Carmike Board also reviewed and discussed with representatives of J.P. Morgan the business relationships of J.P. Morgan with Party B, which the Carmike Board determined were not material.
The Carmike Board also determined that in light of the leverage that would likely be required in connection with a sale of Carmike to a potential financial buyer, the lack of synergies available to a potential financial buyer, the likely required investment returns that would be sought by a potential financial buyer, the current volatility of the financing markets, and the increased likelihood of "leaks" arising in a transaction and the potential disruption of Carmike's management attention with respect to Carmike's ongoing business operations if the number of potential bidders were expanded to include buyers that were unlikely to be competitive, a sale of Carmike to a potential financial buyer was not expected to maximize stockholder value as compared to a potential transaction with AMC or another potential strategic buyer. As part of this determination, the Carmike Board considered the inquiries Carmike's senior management received at the industry conference in December 2015 and determined that such inquiries were not likely to result in a transaction that would maximize stockholder value as compared to a potential transaction with AMC or another potential strategic buyer.
Following the February 15, 2016 Carmike Board meeting, representatives of J.P. Morgan contacted Party A and Party B. Party B informed J.P. Morgan that it was not interested in pursuing a potential transaction with Carmike. Carmike executed an extension to its confidentiality agreement with Party A on February 21, 2016, which confidentiality agreement did not contain any "standstill" restriction that would prevent Party A from making a proposal to acquire Carmike. Following the execution of the extension to the confidentiality agreement, Carmike provided Party A with access to a data room containing financial and other information regarding Carmike, including Carmike's financial results for the fourth quarter of 2015 and its financial results for the 2015 fiscal year, as well as the March 2016 Projections. On March 1, 2016, Party A informed J.P. Morgan that it was not interested in pursuing a potential transaction with Carmike at this time.
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On February 18, 2016, AMC's senior management contacted Carmike's senior management and noted that, based upon prior input from the AMC Board, AMC was reducing the proposed purchase price at which AMC would acquire Carmike from $30.00 per share to $29.85 per share.
During the last two weeks of February 2016 and in early March 2016, the parties continued to negotiate the terms of the original merger agreement, and the parties also discussed and negotiated the financing documents AMC would be entering into to provide financing for the transaction.
On March 3, 2016, the Carmike Board held a special meeting at which members of Carmike's senior management, as well as representatives of King & Spalding and J.P. Morgan, were also present. Prior to the meeting, the Carmike Board had received copies of the original merger agreement, and related documents and a summary of the terms of the transaction, as well as presentation materials prepared by representatives of J.P. Morgan. King & Spalding updated the Carmike Board on its fiduciary duties applicable to its adoption of the original merger agreement, the merger and the other transactions contemplated by the original merger agreement. The Carmike Board, Carmike's senior management and representatives of King & Spalding reviewed the key terms of the proposed merger with AMC and the financing documents AMC would be entering into to provide financing for the transaction. King & Spalding also discussed with the Carmike Board its analysis of antitrust matters related to the proposed transaction, including the regulatory approval process and timing considerations. King & Spalding also discussed the commitments AMC was prepared to make to obtain regulatory approval and the AMC termination fee payable if regulatory approval was not obtained.
In addition, the Carmike Board reviewed with Carmike's senior management and representatives of J.P. Morgan Carmike's March 2016 Projections (as defined below under "—Certain Projections Prepared by the Management of Carmike") and Carmike's financial results for the fourth quarter of 2015 and its financial results for the 2015 fiscal year. Also, representatives of J.P. Morgan reviewed the financial terms of the offer from AMC and reported on the results of the discussions with Party A and Party B. J.P. Morgan also confirmed that there had been no changes to J.P. Morgan's absence of business relationships with AMC and its controlling stockholder since the February 15, 2016 Carmike Board meeting. In reviewing the proposed transaction, the Carmike Board considered that the transaction value to last twelve months (LTM) EBITDA multiple implied by the transaction represented a multiple of 8.8x LTM EBITDA, based on 2015 EBITDA adjusted to include stock-based compensation expense and expenses related to M&A.
The Carmike Board also again considered Carmike's growth strategy, including its new theatre development plans and the potential growth opportunities available to Carmike through its theatre acquisition strategy, as well as initiatives such as expansion of in-theatre dining, remodeling of theatres, luxury reseating and expanded concession offerings. As part of this review, the Carmike Board considered the costs and risks associated with such strategy and initiatives, Carmike's resources and positioning relative to larger competitors, as well as the uncertainties inherent in its new development and theatre acquisition strategy, and the Carmike Board considered the challenges and uncertainties presented by other industry trends. The Carmike Board also reviewed the terms of the severance and retention benefits payable to Carmike employees (including senior management) in connection with the transaction.
Carmike's senior management other than Mr. Passman then left the meeting and the Carmike Board met in executive session with Mr. Passman and representatives of King & Spalding. Following further discussion, the Carmike Board instructed Carmike's senior management to contact AMC's senior management to propose increasing AMC's proposed purchase price from $29.85 per share to $30.00 per share. Mr. Passman then left the meeting, and the Carmike Board continued its executive session with representatives of King & Spalding. After discussions with AMC, Mr. Passman reported to the Carmike Board that AMC had agreed to increase the purchase price to $30.00 per share.
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Carmike's senior management and representatives of J.P. Morgan rejoined the meeting. J.P. Morgan then reviewed with the Carmike Board its financial analysis of the consideration provided for in the original merger agreement and delivered to the Carmike Board its oral opinion, which was confirmed by delivery of a written opinion dated March 3, 2016, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing the opinion, the consideration to be paid to the holders of Carmike common stock in the proposed merger was fair, from a financial point of view, to such holders.
Following thorough review, the Carmike Board unanimously (1) determined that the original merger agreement and transactions contemplated thereby, including the merger, were in the best interests of Carmike's stockholders, (2) approved, adopted and declared advisable, the original merger agreement and the merger, (3) resolved to recommend, subject to the provisions of the original merger agreement, that Carmike's stockholders approve and adopt the original merger agreement and the transactions contemplated thereby, including the merger, and (4) directed that the original merger agreement and the transactions contemplated by the original merger agreement, including the merger, be submitted to Carmike's stockholders for approval and adoption.
On March 3, 2016, the parties issued a press release announcing the transaction.
Following the public announcement of the original merger agreement, two Carmike stockholders publicly expressed dissatisfaction with the $30.00 per share purchase price contemplated by the original merger agreement.
On May 25, 2016, Carmike mailed to its stockholders a notice of stockholder meeting and accompanying proxy statement, referred to as "the original proxy statement," informing Carmike stockholders that a special meeting to vote on the original merger agreement, which, together with adjournments thereof, are referred to as "the original special meeting," had been set for June 30, 2016 and that the record date for determining stockholders entitled to vote at the original special meeting had been set as May 18, 2016. The original proxy statement informed stockholders that three proposals would be voted upon at the original special meeting, including a proposal to adopt the original merger agreement and a proposal to approve the adjournment of the original special meeting from time to time if necessary or appropriate, including to solicit additional proxies if there were not sufficient votes at the time of the original special meeting to adopt the original merger agreement, which proposals are referred to as the "original merger proposal" and the "original adjournment proposal," respectively.
On June 16, 2016, the Carmike Board held a special meeting at which members of Carmike's senior management, as well as representatives of King & Spalding, were also present. At the meeting, Carmike's senior management discussed with the Carmike Board the proxies submitted to date by Carmike's stockholders in connection with the original merger proposal. In addition, Carmike's senior management reviewed and discussed with the Carmike Board the performance of Carmike's business during the second quarter of 2016.
On June 18, 2016, Mr. Aron contacted Mr. Passman to discuss the proxies submitted to date in connection with the original merger proposal. During their conversation, Mr. Aron and Mr. Passman discussed whether AMC might consider proposing an increase in the purchase price in advance of the original special meeting. During these discussions, Mr. Aron did not propose any specific increase in the purchase price. Following this discussion, Messrs. Aron and Passman agreed to further discuss on June 19, 2016 potential next steps with respect to the original merger agreement and the original special meeting.
On June 19, 2016, Mr. Aron informed Mr. Passman that AMC was not inclined to propose an increase in the purchase price prior to the original special meeting and would continue to consider its potential next steps with respect to the original merger agreement and the original special meeting.
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On June 23, 2016, the Carmike Board held a special meeting at which members of Carmike's senior management, as well as representatives of King & Spalding, were also present. At the meeting, Carmike's senior management again reviewed with the Carmike Board the proxies submitted to date by Carmike's stockholders in connection with the original merger proposal. In addition, Mr. Passman reviewed with the Carmike Board the discussions he had with Mr. Aron since the prior meeting of the Carmike Board.
Between June 23, 2016 and June 29, 2016, Messrs. Aron and Passman discussed on several occasions the merger and the original special meeting. During these discussions, Mr. Aron stated that AMC may be willing to consider increasing the purchase price to $32.50 per share, with a portion of such purchase price payable in shares of AMC's Class A common stock. Mr. Aron noted that such proposal was subject to further discussions with and approval by the AMC Board and AMC's controlling stockholder. Mr. Passman informed Mr. Aron that he would discuss this potential purchase price increase with the Carmike Board.
On June 29, 2016, Mr. Aron informed Mr. Passman that AMC, after further consideration, was not ready to propose a purchase price increase in advance of the original special meeting. Mr. Aron requested, pursuant to AMC's right to request an adjournment of the original special meeting under the original merger agreement, that Carmike adjourn the original special meeting to July 15, 2016.
The Carmike Board held a special meeting on June 29, 2016. Members of Carmike's senior management, as well as representatives of King & Spalding, were also present at the meeting. At the meeting, Carmike's senior management reviewed with the Carmike Board the proxies submitted to date by Carmike's stockholders in connection with the original merger proposal and noted that there were insufficient proxies submitted to approve the original merger proposal. Mr. Passman also reviewed with the Carmike Board the discussions he had with Mr. Aron since the prior meeting of the Carmike Board. Mr. Passman also noted that AMC had requested pursuant to its rights under the original merger agreement that Carmike adjourn the original special meeting to July 15, 2016. Representatives of King & Spalding discussed with the Carmike Board its fiduciary duties and Carmike's contractual obligations under the original merger agreement. In addition, the Carmike Board considered the consequences to Carmike if the transaction were not consummated. Following discussion, the Carmike Board unanimously took action to authorize Carmike's senior management to adjourn the original special meeting to July 15, 2016 by authorizing an amendment to Carmike's bylaws facilitating such adjournment.
On June 30, 2016, Carmike adjourned the original special meeting to July 15, 2016 in response to AMC's request for such adjournment.
During the first week of July 2016, Messrs. Aron and Passman engaged in several discussions regarding the transaction. Mr. Aron did not propose an increased purchase price to Mr. Passman as part of these discussions.
On July 7, 2016, Mr. Aron informed Mr. Passman that AMC expected to propose an increase in the purchase price on July 12, 2016 following additional discussions with the AMC Board and AMC's controlling stockholder.
The Carmike Board held a special meeting on July 8, 2016. Members of Carmike's senior management, as well as representatives of King & Spalding, were also present at the meeting. At the meeting, the Carmike Board reviewed the discussions Mr. Passman had with Mr. Aron since the prior meeting of the Carmike Board.
On July 12, 2016, Mr. Aron contacted Mr. Passman and proposed an increase in the purchase price from $30.00 per share to $33.06 per share, with 20% of the consideration payable in shares of AMC's Class A common stock. Mr. Aron also stated that the exchange ratio contemplated by such
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offer would be further discussed between the parties and their respective advisors. Mr. Aron stated that this increased purchase price was AMC's best and final offer.
The Carmike Board held a special meeting on July 12, 2016. Members of Carmike's senior management, as well as representatives of King & Spalding and J.P. Morgan, were also present at the meeting. At the meeting, the Carmike Board discussed AMC's proposal with Carmike's senior management and representatives of J.P. Morgan and King & Spalding. The Carmike Board discussed the fact that AMC's revised offer contemplated the receipt by Carmike stockholders of equity interests in AMC, as well as the fact that the receipt of such an equity interest would permit Carmike stockholders to participate in the future upside potential of a combined AMC/Carmike company. The Carmike Board also noted the fact that certain Carmike stockholders had publicly expressed a preference to receive an equity interest in AMC in connection with a potential transaction. In addition, the Carmike Board discussed with representatives of J.P. Morgan the potential risks and benefits associated with a transaction in which the amount of AMC equity issuable in the transaction was based on a "fixed exchange ratio" (in which Carmike stockholders would receive a fixed number of shares of AMC Class A common stock) or a "floating exchange ratio" (in which Carmike stockholders would receive a specific dollar amount of shares of AMC Class A common stock, with the number of shares of AMC Class A common stock issuable varying based on the trading price of AMC's Class A common stock). Following discussion, the Carmike Board instructed Mr. Passman to contact Mr. Aron to request that Mr. Aron increase AMC's proposed $33.06 per share purchase price, which Mr. Passman did following the Carmike Board meeting.
On July 12, 2016, AMC announced that it had entered into a definitive agreement, pursuant to which AMC will acquire Odeon/UCI.
On July 13, 2016, King & Spalding provided Husch Blackwell with a draft of an amended and restated merger agreement that contemplated a potential change in the amount and form of merger consideration. King & Spalding and Husch Blackwell thereafter negotiated the terms of the draft amended and restated merger agreement.
On July 14, 2016, Mr. Aron informed Mr. Passman that AMC would not increase its proposed purchase price above $33.06 per share, but that it may be willing to increase the percentage of merger consideration that would be payable in shares of AMC's Class A common stock. Mr. Aron also stated that AMC was only willing to consummate a transaction in which the amount of AMC equity issuable in the transaction was based on a fixed exchange ratio, and not a floating exchange ratio. Mr. Passman told Mr. Aron that he would discuss this proposal with the Carmike Board. Mr. Aron also stated that AMC expected to have revised financing commitments finalized the following week.
The Carmike Board held a special meeting on July 14, 2016 to consider the discussions Mr. Passman had with Mr. Aron since the prior meeting of the Carmike Board. Representatives of King & Spalding, J.P. Morgan and Innisfree M&A Incorporated, Carmike's proxy solicitor, referred to as "Innisfree," were also present at the meeting. At the meeting, the Carmike Board again discussed AMC's proposed offer and the potential issuance of shares of AMC's Class A common stock in a transaction. Innisfree discussed with the Carmike Board Innisfree's perspectives on the proxy solicitation process to date. Following discussion, the Carmike Board again instructed Mr. Passman to contact Mr. Aron to request that Mr. Aron increase his proposed $33.06 per share price and to further discuss with Mr. Aron a transaction with a fixed exchange ratio, which Mr. Passman did following the Carmike Board meeting. In addition, in light of the ongoing discussions with AMC, the Carmike Board authorized Carmike's senior management to adjourn the original special meeting to July 25, 2016.
On July 15, 2016, Carmike adjourned the original special meeting to July 25, 2016.
On July 19, 2016, Mr. Aron informed Mr. Passman that AMC would not increase its offer above $33.06 per share. Mr. Aron also stated that, following discussions with the AMC Board as well as
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AMC's controlling stockholder, AMC would be willing to increase the percentage of shares of AMC Class A common stock issuable in a potential transaction from 20% to 25%. Mr. Aron stated that such shares of AMC Class A common stock would be issuable pursuant to a fixed exchange ratio, with the exchange ratio determined based upon a "volume weighted average price" of AMC's Class A common stock for the five day period ending on July 19, 2016.
On July 20, 2016, the Carmike Board held a special meeting. Members of Carmike's senior management, as well as representatives of King & Spalding and J.P. Morgan, were also present at the meeting. At the meeting, the Carmike Board discussed AMC's revised proposal with Carmike's senior management and representatives of J.P. Morgan and King & Spalding. In addition, Carmike's senior management reviewed and discussed with the Carmike Board the performance of Carmike's business during the second quarter of 2016. Following discussion, the Carmike Board again instructed Mr. Passman to contact Mr. Aron to request that Mr. Aron increase AMC's proposed purchase price above $33.06 per share, which Mr. Passman did following the Carmike Board meeting.
On July 21, 2016, Mr. Aron reiterated to Mr. Passman that AMC would not increase its offer above $33.06 per share. Mr. Aron also stated that AMC would be willing to increase the percentage of shares of AMC Class A common stock issuable in a potential transaction from 25% to 30%, with such shares issuable pursuant to a fixed exchange ratio based upon the same five day "volume weighted average price" of AMC's Class A common stock ending on July 19, 2016. Mr. Aron stated that this revised offer was AMC's best and final offer. The Carmike Board held a special meeting on July 22, 2016 to review AMC's revised proposal. Following discussion, the Carmike Board determined to further consider AMC's revised proposal on July 24, 2016.
On July 24, 2016, the Carmike Board held a special meeting at which members of Carmike's senior management, as well as representatives of King & Spalding and J.P. Morgan, were also present. Prior to the meeting, the Carmike Board had received copies of the amended and restated merger agreement, and related documents and a summary of the terms of the transaction, as well as presentation materials prepared by representatives of J.P. Morgan. King & Spalding updated the Carmike Board on its fiduciary duties applicable to its adoption of the amended and restated merger agreement, the merger and the other transactions contemplated by the amended and restated merger agreement. The Carmike Board, Carmike's senior management and representatives of King & Spalding reviewed the key terms of the proposed merger with AMC and the financing documents AMC would be entering into to provide financing for the transaction. King & Spalding also updated the Carmike Board on antitrust matters related to the proposed transaction.
In addition, the Carmike Board reviewed with Carmike's senior management and representatives of J.P. Morgan Carmike's "July 2016 Projections" (as defined below under "—Certain Projections Prepared by the Management of Carmike"). As part of this discussion, the Carmike Board discussed with Carmike's senior management the changes in the July 2016 Projections as compared to the March 2016 Projections. Representatives of J.P. Morgan reviewed the financial terms of the revised offer from AMC. In reviewing the proposed transaction, the Carmike Board considered that the transaction value to last twelve months (LTM) EBITDA multiple implied by the transaction represented a multiple of 9.4x LTM EBITDA, based on Carmike's LTM EBITDA through June 30, 2016 adjusted to include stock-based compensation expense and expenses related to merger and acquisition opportunities. In connection with this review, the Carmike Board noted that Carmike's publicly reported LTM Adjusted EBITDA through June 30, 2016 was approximately $131.6 million (compared to $126.4 million used for purposes of calculating the 9.4x LTM EBITDA multiple) and was not reduced by stock-based compensation expense of $4.9 million or expenses related to merger and acquisition opportunities of $0.3 million (which amount excludes fees and expenses incurred in connection with the AMC transaction). However, the Carmike Board believed that, for purposes of evaluating the proposed transaction, LTM EBITDA should be reduced by stock-based compensation expense and expenses related to merger and acquisition opportunities, as such expenses are reflective of recurring expenses
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expected to be incurred in connection with Carmike's ongoing operations and strategic initiatives. The Carmike Board discussed with representatives of J.P. Morgan the transaction multiple AMC agreed to pay in connection with the Odeon/UCI transaction. The Carmike Board also discussed with representatives of J.P. Morgan the value of Carmike's equity interest in SV Holdco, LLC (which is a holding company that owns and operates the Screenvision business through a subsidiary entity). In addition, the Carmike Board reviewed information regarding AMC and its historical and projected financial performance, as well as information regarding the trading performance and liquidity of AMC's Class A common stock. The Carmike Board also discussed with its advisors the implications to Carmike and its business if the transaction otherwise was not consummated.
Also at the meeting, the Carmike Board reviewed the terms of the severance and retention benefits payable to Carmike employees (including senior management) in connection with the transaction. J.P. Morgan also confirmed that there had been no changes to J.P. Morgan's absence of business relationships with AMC and its controlling stockholder since the February 15, 2016 Board meeting.
J.P. Morgan reviewed with the Carmike Board its financial analysis of the consideration provided for in the amended and restated merger agreement and delivered to the Carmike Board its oral opinion, which was confirmed by delivery of a written opinion dated July 24, 2016, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing the opinion, the aggregate merger consideration to be paid to the holders of Carmike common stock in the proposed merger was fair, from a financial point of view, to such holders, as more fully described below under "—Opinion of Carmike's Financial Advisor."
Following thorough review, including discussion of the factors summarized below under "—Carmike's Reasons for the Merger," the Carmike Board unanimously (1) determined that the amended and restated merger agreement and transactions contemplated thereby, including the merger, are in the best interests of Carmike's stockholders, (2) approved, adopted and declared advisable, the amended and restated merger agreement and the merger, (3) resolved to recommend, subject to the provisions of the original merger agreement, that Carmike's stockholders approve and adopt the amended and restated merger agreement and the transactions contemplated thereby, including the merger, and (4) directed that the amended and restated merger agreement and the transactions contemplated thereby, including the merger, be submitted to Carmike's stockholders for approval and adoption.
On July 25, 2016, each of Carmike and AMC issued a press release announcing the revised transaction.
At its meeting held on July 24, 2016, after due consideration and consultation with AMC's management and legal and financial advisors, the AMC Board approved entry into the amended and restated merger agreement, providing for, among other things, an increase in the merger consideration from $30.00 per share of Carmike common stock, in cash without interest, to either (i) $33.06 in cash, without interest, or (ii) 1.0819 shares of AMC Class A common stock, less applicable withholdings, at the election of the Carmike stockholders, subject to proration so that 70% of the total number of shares of Carmike common stock issued and outstanding at the effective time of the merger (excluding certain excluded shares) will be converted into cash and 30% of the Carmike shares will be converted into AMC Class A common stock. In doing so, the AMC Board considered the business, assets, liabilities, results of operations, financial performance, strategic direction and prospects of Carmike and
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determined that the merger was in the best interests of AMC. In making its determination, the AMC Board focused on a number of factors, including the following:
- •
- the increase in merger consideration from the original merger agreement, including the use of AMC Class A common stock as
partial consideration;
- •
- the acquisition would increase AMC's footprint by adding theatres with complementary geographic and guest demographic profile that
strengthens the combined company's admission growth potential with limited geographic overlap;
- •
- the opportunity to realize annual cost synergies of approximately $35 million, primarily through reductions in general and
administrative costs, such as accounting, finance, and technology;
- •
- the per share merger consideration, the fact that the exchange ratio is fixed, and the resulting percentage ownership interest that
current Carmike stockholders would have in AMC following the merger;
- •
- the terms and conditions of the amended and restated merger agreement, including the conditions to the completion of the merger, the
circumstances under which the amended and restated merger agreement could be terminated and the impact of such termination, and the potential payment by Carmike of a termination fee; and
- •
- AMC's recent announcement of its intent to acquire Odeon/UCI, further increasing AMC's movie theatre platform.
This description of information and factors considered by the AMC Board includes the material factors that were considered, but is not intended to be exhaustive. In view of the wide variety of factors considered by the AMC Board in evaluating the merger, and the complexity of these matters, the AMC Board did not attempt to quantify, rank or otherwise assign relative weight to these factors. In addition, different members of the AMC Board may have given different weight to different factors.
The foregoing description of factors supporting the AMC Board's approval of the merger is forward looking in nature, and should be read in light of the matters discussed in the "Cautionary Statement Concerning Forward-Looking Information" on page 37.
Carmike's Reasons for the Merger
In evaluating the amended and restated merger agreement and the transactions contemplated thereby, including the merger, the Carmike Board consulted with Carmike's senior management, King & Spalding and J.P. Morgan. In the course of reaching its determination to approve the amended and restated merger agreement and the transactions contemplated thereby, including the merger, and to recommend that Carmike's stockholders vote to approve the merger proposal, the Carmike Board considered many factors, including the following factors weighing in favor of approving the amended and restated merger agreement, which are not intended to be exhaustive and are not presented in any relative order of importance:
Premium Contemplated by Merger Consideration
The fact that the merger consideration represents a premium over the market prices at which Carmike common stock traded prior to the announcement of the execution of the amended and restated merger agreement, including the fact that the merger consideration of $33.06 per share of Carmike common stock represented a premium of approximately:
- •
- 32% to the $25.11 closing price per share of Carmike common stock on March 3, 2016, the last date prior to the announcement of the original merger agreement with AMC,
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- •
- 10% over the $30.00 per share merger consideration contemplated by the original merger agreement with AMC;
- •
- 79% to the low trading price of Carmike common stock over the twelve (12) months ended March 3, 2016;
- •
- 48% to the volume weighted average price of Carmike common stock over the six (6) months ended March 3, 2016; and
- •
- 51% to the volume weighted average price of Carmike common stock over the three (3) months ended March 3, 2016.
The Carmike Board also considered the certainty of value and liquidity for Carmike stockholders provided by the fact that the aggregate merger consideration is 70% cash at a fixed price and that Carmike's stockholders may elect the cash consideration, subject to proration in accordance with the terms of the amended and restated merger agreement.
In addition, the Carmike Board considered the fact that the transaction value to last twelve months (LTM) EBITDA multiple implied by the transaction represented a multiple of 9.4x LTM EBITDA, based on Carmike's LTM EBITDA through June 30, 2016 adjusted to include stock-based compensation expense and expenses related to merger and acquisition opportunities. In connection with this consideration, the Carmike Board noted that Carmike's publicly reported LTM Adjusted EBITDA through June 30, 2016 was approximately $131.6 million (compared to $126.4 million used for purposes of calculating the 9.4x LTM EBITDA multiple) and was not reduced by stock-based compensation expense of $4.9 million or expenses related to merger and acquisition opportunities of $0.3 million (which amount excludes fees and expenses incurred in connection with the AMC transaction). However, the Carmike Board believed that, for purposes of evaluating the proposed transaction, LTM EBITDA should be reduced by stock-based compensation expense and expenses related to merger and acquisition opportunities, as such expenses are reflective of recurring expenses expected to be incurred in connection with Carmike's ongoing operations and strategic initiatives.
Cash/Stock Election
The fact that all of Carmike's stockholders have the opportunity to elect the form of consideration they would like to receive in the form of cash, AMC Class A common stock or a mix of cash and AMC Class A common stock (subject to the limitations and proration described in "Terms of the Amended and Restated Merger Agreement—Proration and Allocation" beginning on page 113 and subject to the terms of the amended and restated merger agreement), which allows Carmike's stockholders to choose a form of consideration that would allow them to receive either a certain cash value for their shares and monetize their investment in Carmike, participate in the potential future increase in value of an investment in AMC, or dispose of their AMC shares in the public market.
Cost Savings and Growth Opportunities
The fact that Carmike's stockholders who receive AMC Class A common stock as a result of the election process will be stockholders of AMC after the merger, allowing them to benefit from any potential cost-saving synergies and growth opportunities associated with the merger. The Carmike Board also considered the fact that the combination of Carmike and AMC is expected to make AMC the largest motion picture exhibitor in the United States.
In addition, the Carmike Board considered the fact that Carmike's stockholders may benefit from AMC's acquisition of the European motion picture exhibitor Odeon/UCI. If completed, the combination of AMC, Carmike and Odeon/UCI is expected to make AMC the largest motion picture exhibitor in the world, allowing Carmike's stockholders who become AMC stockholders to benefit from AMC's increased global presence.
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Fixed Exchange Ratio
The fact that the merger consideration will be paid pursuant to a fixed exchange ratio, which means Carmike's stockholders may benefit from an increase in the trading price of AMC Class A common stock during the pendency of this transaction.
Growth Strategy and Other Initiatives
The risks and challenges of achieving Carmike's growth strategy, including its new theatre development plans and the potential growth opportunities available to Carmike through its theatre acquisition strategy, as well as the risks and challenges of achieving Carmike's other initiatives, such as expansion of in-theatre dining, remodeling of theatres, luxury reseating and expanded concession offerings.
Strategic Alternatives
The strategic process undertaken by Carmike, in consultation with its advisors, including the fact the Carmike Board and Carmike's management had evaluated and considered strategic alternatives, including: (1) continuing to run the company in the ordinary course, (2) the acquisition and/or building of additional theatres and screens to grow the company's business and (3) selling the company. In addition, the Carmike Board considered the market check activities conducted by Carmike from December 2014 through March 2015 as well as the market check activities conducted in February 2016 discussed above under "—Background of the Merger" and the fact that, since December 2014, Carmike approached five separate parties in addition to AMC to discuss a potential transaction and only executed confidentiality agreements with one party other than AMC, with only AMC submitting a proposal to consummate a transaction.
The Carmike Board further considered that, after consultation with Carmike's independent legal and financial advisors, it believed the terms of the amended and restated merger agreement provide an adequate opportunity for alternative proposals to be made, associated due diligence to be conducted and definitive documentation to be negotiated with respect thereto, and for the Carmike Board to consider such alternative proposals and agreements, if any.
Negotiations with AMC
The course of negotiations with AMC, which were conducted at arm's length and during which the Carmike Board was advised by its legal and financial advisors, including the fact that the negotiations resulted in (1) an increased purchase price in the original merger agreement, (2) a lower fiduciary termination fee, allowing an interested third party to more easily make a superior proposal, (3) robust commitments from AMC to take antitrust actions to complete the transaction, including a requirement to make divestitures up to certain thresholds and a termination fee payable in certain circumstances if regulatory approval is not obtained, (4) the company being able to contact potential acquirers during the negotiation process to gauge their potential interest in a business combination and (5) an additional increase in the purchase price as reflected in the amended and restated merger agreement, which AMC has announced is its best and final offer for Carmike.
Likelihood of Completion
The likelihood of obtaining required regulatory approvals and AMC's firm commitments and covenants to take actions to obtain such approval, including robust divestiture commitments and a termination fee payable in certain circumstances if regulatory approval is not obtained. The Carmike Board considered the ability of AMC to obtain financing to consummate the transaction, the terms and nature of the financing commitments received by AMC, and the fact that the merger is not contingent on AMC's obtaining financing. The Carmike Board also considered that there is no AMC stockholder
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vote required to consummate the merger, the likelihood of receiving the approval of Carmike's stockholders and the other limited conditions to the parties' obligations to complete the merger.
Opinion of Carmike's Financial Advisor
The oral opinion of J.P. Morgan delivered to the Carmike Board, which was confirmed by delivery of a written opinion dated July 24, 2016, to the effect that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the review undertaken by J.P. Morgan in preparing the opinion, the aggregate merger consideration to be paid to the holders of Carmike's common stock in the proposed merger was fair, from a financial point of view, to such holders, as more fully described below under "—Opinion of Carmike's Financial Advisor." The full text of the written opinion of J.P. Morgan, dated July 24, 2016, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken in rendering the opinion, is attached as Annex B to this proxy statement/prospectus.
Terms of the Amended and Restated Merger Agreement
The terms and conditions of the amended and restated merger agreement, including:
- •
- the customary nature of the representations, warranties and covenants of Carmike and AMC in the amended and restated merger agreement;
- •
- the flexibility permitted under the interim operating covenants which restrict the conduct of Carmike's business prior to the
completion of the merger;
- •
- AMC's covenants to undertake efforts to obtain regulatory approvals, including the commitment by AMC to divest certain theatre and
non-theatre assets, the commitment by AMC to obtain applicable regulatory approvals and the related regulatory termination fee of $50 million payable to the company in certain circumstances if
the merger is not completed due to a failure to meet regulatory conditions (see below under "—Regulatory Commitments");
- •
- Carmike's ability, subject to certain limitations, to respond to unsolicited acquisition or business combination proposals from third
parties and to provide such third parties with confidential information;
- •
- the Carmike Board's right, in accordance with the terms of the amended and restated merger agreement, to terminate the amended and
restated merger agreement in order to enter into an agreement with respect to a superior proposal with the payment of a $30 million termination fee;
- •
- the Carmike Board's right, in accordance with the terms of the amended and restated merger agreement, to change its recommendation to
Carmike's stockholders to approve the merger following the occurrence of an intervening event (as defined in "Terms of the Amended and Restated Merger Agreement—No
Solicitation of Acquisition Proposals; Changes in Board Recommendation" beginning on page 124 of this proxy statement/prospectus);
- •
- Carmike's ability to seek specific performance of AMC's obligations under the amended and restated merger agreement, including the
obligation to complete the merger, under certain circumstances; and
- •
- other terms that, in the aggregate, the Carmike Board viewed as providing a significant degree of certainty that the merger will be completed as promptly as possible.
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Regulatory Commitments
The level of commitment of AMC to obtain regulatory approvals, which was negotiated vigorously and which resulted in enhanced commitments from AMC to divest certain theatre and non-theatre assets and the potential payment to Carmike in certain circumstances of a termination fee of $50 million if the merger is not completed due to a failure to meet the regulatory conditions.
Stockholder Vote
The fact that the amended and restated merger agreement will be subject to the adoption by the affirmative vote of the holders of shares representing a majority of Carmike's outstanding common stock entitled to vote at the special meeting, and the absence of any commitments requiring any stockholders to vote in favor of the merger proposal at the special meeting, allowing Carmike's stockholders to approve or disapprove of the merger proposal.
Availability of Appraisal Rights
The fact that Carmike stockholders are entitled under Section 262 of the DGCL to exercise appraisal rights with respect to the merger, allowing such stockholders who have properly demanded and exercised appraisal rights under Section 262 of the DGCL to seek a determination of the fair value of their shares by a court of competent jurisdiction.
The Carmike Board also considered a variety of risks and other potentially negative factors concerning the merger and the amended and restated merger agreement, including the following:
No Stockholder Participation in Future Earnings Growth in Certain Circumstances
To the extent that Carmike's stockholders receive cash consideration as a result of the election process, such stockholders would be prevented from participating in any future earnings growth with respect to the combined businesses of Carmike and AMC.
Effect of Failure to Complete the Transaction
While the Carmike Board expects that the merger will be completed, there can be no assurance that the required stockholder approval will be obtained or that all of the conditions to the completion of the merger will be satisfied or waived or that the merger will receive required regulatory approvals, and, as a result, it is possible that the merger may not be completed in a timely matter or at all, even if the merger proposal is approved by Carmike's stockholders. The Carmike Board also considered potential negative effects if the merger proposal were not completed, including that:
- •
- the trading price of Carmike's common stock could be adversely affected;
- •
- Carmike would have incurred significant transaction and opportunity costs attempting to complete the merger, including the loss of
potential acquisitions;
- •
- Carmike could lose business partners and employees after the announcement of the execution of the amended and restated merger
agreement;
- •
- Carmike's business may be subject to significant disruption and decline;
- •
- Carmike's strategy to grow through theatre acquisition transactions and new theatre developments would not have progressed while
Carmike was working to implement the merger;
- •
- the market's perceptions of Carmike's prospects could be adversely affected; and
- •
- Carmike's directors, officers, and other employees would have expended considerable time and effort to negotiate, implement and complete the merger, and their time may have been diverted from other important business opportunities and operational matters while working to implement the merger.
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Effect of Public Announcement
The Carmike Board considered the effect of the public announcement of the execution of the original merger agreement and the public announcement of the amended and restated merger agreement on Carmike's operations, stock price and employees, its ability to retain key employees, its ability to effectively recruit replacement personnel if key personnel were to depart while the merger is pending and the potential adverse effects on Carmike's financial results as a result of any related disruption in its business.
Regulatory Risk
The Carmike Board considered the possibility of significant costs and delays resulting from seeking regulatory approvals necessary to complete the transactions contemplated by the amended and restated merger agreement, the possibility that the merger may not be completed if such approvals are not obtained, potential negative impacts on Carmike, its business, and its stock price if such approvals are not obtained and the potential difficulties in completing any required divestitures of assets.
AMC's Pending Acquisition of Odeon/UCI
The Carmike Board considered the risks and uncertainty that AMC's pending acquisition of Odeon/UCI presents to the consummation of the merger, including how the pending acquisition may impact the trading price of AMC's Class A common stock.
Cash/Stock Election
The Carmike Board considered the fact that Carmike stockholders may not receive the amount of cash consideration or stock consideration they elected to receive due to proration, and therefore such stockholders may receive consideration having an aggregate value that is less than the aggregate value of the consideration they elected to receive. The Carmike Board also considered the fact that Carmike stockholders who fail to make a valid election for any reason will be deemed to have made a non-election and will have no control over the type of merger consideration that they receive with respect to their shares of Carmike common stock.
Flexibility to Operate the Business
Notwithstanding the increased flexibility to operate Carmike's business and retain its employees obtained in negotiations with AMC, the Carmike Board considered the remaining restrictions imposed by the amended and restated merger agreement on the conduct of its business prior to the completion of the merger, which require Carmike to operate the business only in the ordinary course of business, and that subject the operations of the business to other restrictions, which could delay or prevent Carmike from undertaking timely business enhancement opportunities, including the acquisition of businesses and theatres and entering into material contracts, that may arise prior to the completion of the merger and that may have an adverse effect on Carmike's ability to respond to changing market and business conditions in a timely manner or at all.
No Solicit
The Carmike Board considered the fact that it would not be permitted to solicit alternative transaction proposals regarding a business combination.
Termination Fee
The Carmike Board considered the fact that, under certain circumstances, Carmike may be required to pay to AMC a termination fee of $30 million. The Carmike Board considered the potential
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effect of such termination fee to deter other potential acquirors from making a competing offer for Carmike, and the potential impact of the termination fee on certain transactions involving Carmike in which Carmike or third parties may seek to engage for 18 months following the date on which the amended and restated merger agreement is terminated in certain circumstances.
Fixed Exchange Ratio
The fact that the exchange ratio for the stock component of the merger consideration is fixed, which means that Carmike's stockholders could be adversely affected by a decrease in the trading price of AMC Class A common stock during the pendency of this transaction.
Taxable Merger Consideration
The fact that the receipt of the merger consideration by Carmike's stockholders will be fully taxable, including any portion of the merger consideration that is payable in shares of AMC Class A common stock.
Appraisal Rights
The Carmike Board considered the fact that, if the holders of 20% or more of Carmike's shares have exercised their appraisal rights in accordance with Delaware law, then AMC has the right to not complete the merger, even if Carmike's stockholders otherwise approve the merger.
Interests of the Carmike Board and Management
The Carmike Board considered that certain of the directors and executive officers have interests in the transactions contemplated by the amended and restated merger agreement described below under "—Interests of Certain Persons in the Merger" that would be different from, or in addition to, those of Carmike's stockholders.
Recommendation of Carmike Board of Directors
After considering various reasons to approve the amended and restated merger agreement, as well as certain countervailing factors, the Carmike Board members unanimously determined that the amended and restated merger agreement and transactions contemplated thereby, including the merger, are in the best interests of Carmike's stockholders and approved, adopted and declared advisable, the amended and restated merger agreement and the merger. Certain factors considered by the Carmike Board in reaching its decision to approve the amended and restated merger agreement and the merger can be found above under "—Carmike's Reasons for the Merger."
The Carmike Board unanimously recommends that you vote "FOR" the merger proposal, thereby approving the transactions contemplated thereby, including the merger.
Opinion of Carmike's Financial Advisor
Pursuant to an engagement letter dated February 22, 2016, as amended on July 19, 2016, Carmike retained J.P. Morgan as its financial advisor in connection with the proposed merger.
At the meeting of the Carmike Board on July 24, 2016, J.P. Morgan rendered its oral opinion to the Carmike Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the aggregate merger consideration to be paid to holders of Carmike common stock in the proposed merger was fair, from a financial point of view, to such stockholders. J.P. Morgan has confirmed its July 24, 2016 oral opinion by delivering its written opinion to the Carmike Board, dated July 24, 2016, that, as of such date, the aggregate merger consideration to be paid to Carmike's
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common stockholders in the proposed merger was fair, from a financial point of view, to such stockholders.
The full text of the written opinion of J.P. Morgan dated July 24, 2016, which sets forth the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of J.P. Morgan set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Carmike's stockholders are urged to read the opinion in its entirety. J.P. Morgan's written opinion was addressed to the Carmike Board (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the consideration to be paid in the merger and did not address any other aspect of the merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any other class of securities, creditors or other constituencies of Carmike or as to the underlying decision by Carmike to engage in the proposed merger. The issuance of J.P. Morgan's opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of Carmike as to how such stockholder should vote with respect to the proposed merger or any other matter.
In arriving at its opinion, J.P. Morgan, among other things:
- •
- reviewed the amended and restated merger agreement;
- •
- reviewed certain publicly available business and financial information concerning Carmike and the industries in which it operates;
- •
- compared the proposed financial terms of the merger with the publicly available financial terms of certain transactions involving
companies J.P. Morgan deemed relevant and the consideration received for such companies;
- •
- compared the financial and operating performance of Carmike with publicly available information concerning certain other companies
J.P. Morgan deemed relevant and reviewed the current and historical market prices of Carmike common stock and certain publicly traded securities of such other companies;
- •
- reviewed certain internal financial analyses and forecasts prepared by the management of Carmike relating to its business; and
- •
- performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.
In addition, J.P. Morgan held discussions with certain members of the management of Carmike and AMC with respect to certain aspects of the merger, and the past and current business operations of Carmike and AMC, the financial condition and future prospects and operations of Carmike and AMC, the effects of the merger on the financial condition and future prospects of Carmike and AMC and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.
In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by Carmike and AMC or otherwise reviewed by or for J.P. Morgan, and J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to its engagement letter with Carmike, did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of Carmike or AMC under any applicable laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to J.P. Morgan or derived therefrom, J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the
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expected future results of operations and financial condition of Carmike and AMC to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the merger will be consummated as described in the amended and restated merger agreement. J.P. Morgan also assumed that the representations and warranties made by Carmike and AMC in the amended and restated merger agreement and the related agreements were and will be true and correct in all respects material to its analysis. J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to Carmike with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without any adverse effect on Carmike or AMC or on the contemplated benefits of the merger.
The projections furnished to J.P. Morgan for Carmike were prepared by Carmike's management. One set of projections, the July 2016 Projections—Without Acquisitions (defined below under "—Certain Projections Prepared by the Management of Carmike"), reflected the expected financial performance of Carmike without giving effect to certain strategic acquisitions planned by Carmike. The other set of projections, July 2016 Projections—With Acquisitions (defined below under "—Certain Projections Prepared by the Management of Carmike"), was prepared by Carmike's management to give effect to such acquisitions. Carmike does not publicly disclose internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan's analysis of the merger, and such projections were not prepared with a view toward public disclosure. These projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections. For more information regarding the use of projections, see below under "—Certain Projections Prepared by the Management of Carmike."
J.P. Morgan's opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan's opinion noted that subsequent developments may affect J.P. Morgan's opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan's opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of Carmike common stock in the proposed merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration to the holders of any other class of securities, creditors or other constituencies of Carmike or the underlying decision by Carmike to engage in the merger. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed merger, or any class of such persons relative to the consideration in the proposed merger or with respect to the fairness of any such compensation. J.P. Morgan expressed no opinion as to the price at which Carmike common stock or AMC Class A common stock will trade at any future time.
The terms of the amended and restated merger agreement were determined through arm's length negotiations between Carmike and AMC, and the decision to enter into the amended and restated merger agreement was solely that of the Carmike Board. J.P. Morgan's opinion and financial analyses were only one of the many factors considered by the Carmike Board in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Carmike Board or Carmike's management with respect to the proposed merger or the merger consideration.
In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodology in rendering its opinion to the Carmike Board on July 24, 2016 and contained in the presentation delivered to the Carmike Board on such date in connection with the rendering of such opinion and does not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information
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presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan's analyses.
Public Trading Multiples
Using publicly available information, J.P. Morgan compared selected financial data of Carmike with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be sufficiently analogous to the business of Carmike or aspects thereof. The companies selected by J.P. Morgan were as follows:
- •
- AMC Entertainment Holdings, Inc.
- •
- Regal Entertainment Group
- •
- Cinemark Holdings, Inc.
- •
- Cineplex Inc.
These companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan's analysis, may be considered similar to those of Carmike. However, certain of these companies may have characteristics that are materially different from those of Carmike. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the selected companies differently than they would affect Carmike.
Using publicly available information, J.P. Morgan calculated, for each selected company, the ratio of the company's firm value (calculated as the market value of the company's common stock on a fully diluted basis, plus any debt and minority interest, less unconsolidated investments and cash and cash equivalents) to the consensus equity research analyst estimate for the company's EBITDA (calculated as earnings before interest, tax, depreciation and amortization) for the years ending December 31, 2016, referred to as the "2016E FV/EBITDA," and December 31, 2017, referred to as the "2017E FV/EBITDA."
This analysis indicated the following FV/EBITDA multiples for 2016E and 2017E:
| |
2016E FV/EBITDA |
2017E FV/EBITDA |
|||||
|---|---|---|---|---|---|---|---|
Carmike (July 2016 Projections—With Acquisitions) |
7.6x | 6.8x | |||||
Carmike (Consensus Equity Research Analyst Projection) |
7.7x | 6.9x | |||||
AMC Entertainment Holdings, Inc. |
8.2x | 7.4x | |||||
Regal Entertainment Group |
9.4x | 8.7x | |||||
Cinemark Holdings, Inc. |
8.9x | 7.9x | |||||
Cineplex Inc. |
13.2x | 11.7x | |||||
Based on the results of this analysis, J.P. Morgan selected (1) multiple reference ranges for 2016E FV/ EBITDA of 7.5x - 8.5x and (2) multiple reference ranges for 2017E FV/EBITDA of 6.5x - 8.0x.
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After applying such ranges to the projected EBITDA for Carmike for the years ending December 31, 2016 and December 31, 2017 based on July 2016 Projections—Without Acquisitions, the analysis indicated the following implied per share equity value ranges for Carmike common stock:
Implied Per Share Equity Value Ranges: July 2016 Projections—Without Acquisitions
| |
Implied Per Share Equity Value |
||||||
|---|---|---|---|---|---|---|---|
| |
Low | High | |||||
2016E FV/EBITDA |
$ | 21.50 | $ | 26.30 | |||
2017E FV/EBITDA |
$ | 23.85 | $ | 32.70 | |||
After applying such ranges to the projected EBITDA for Carmike for the years ending December 31, 2016 and December 31, 2017 based on July 2016 Projections—With Acquisitions, the analysis indicated the following implied per share equity value ranges for Carmike common stock:
Implied Per Share Equity Value Ranges: July 2016 Projections—With Acquisitions
| |
Implied Per Share Equity Value |
||||||
|---|---|---|---|---|---|---|---|
| |
Low | High | |||||
2016E FV/EBITDA |
$ | 21.50 | $ | 26.30 | |||
2017E FV/EBITDA |
$ | 25.25 | $ | 34.40 | |||
After applying such ranges to the consensus equity research analyst projection of EBITDA for Carmike for the years ending December 31, 2016 and December 31, 2017, the analysis indicated the following implied per share equity value ranges for Carmike common stock:
Implied Per Share Equity Value Ranges—Consensus Equity Research Analyst Projection
| |
Implied Per Share Equity Value |
||||||
|---|---|---|---|---|---|---|---|
| |
Low | High | |||||
2016E FV/EBITDA |
$ | 23.90 | $ | 29.00 | |||
2017E FV/EBITDA |
$ | 22.55 | $ | 31.10 | |||
The ranges of implied per share equity values for Carmike common stock based on July 2016 Projections—With Acquisitions, July 2016 Projections—Without Acquisitions and the consensus equity research analyst projection were compared to Carmike's closing share price of $25.11 on March 3, 2016, the original proposed consideration of $30.00 per share of Carmike common stock and the current proposed consideration of $33.06 per share of Carmike common stock, calculated as of July 19, 2016. The implied per share equity value of the current proposed consideration of $33.06 as used throughout this summary was calculated based on an exchange ratio of 0.3246 multiplied by the volume weighted average price of AMC Class A common stock over the five trading days ending on July 19, 2016 of $30.56, resulting in implied stock consideration per share valued at $9.92, plus the implied cash consideration per share of $23.14.
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Selected Transaction Analysis
Using publicly available information, J.P. Morgan reviewed selected transactions involving acquired businesses and assets that, for purposes of J.P. Morgan's analysis, may be considered similar to Carmike's business or assets. Specifically, J.P. Morgan reviewed the following transactions:
Month/Year Announced
|
Acquiror | Target/Seller | ||
|---|---|---|---|---|
| October 2015 | Carmike Cinemas, Inc. | Sundance Cinemas, LLC | ||
| July 2015 | AMC Entertainment Holdings, Inc. | Starplex Cinemas | ||
| May 2014 | Carmike Cinemas, Inc. | Digital Cinemas Destinations Corp. | ||
| November 2013 | Carmike Cinemas, Inc. | Muvico Entertainment, L.L.C. (9 locations) | ||
| June 2013 | Cineplex Entertainment | Empire Theatres Limited (24 locations) | ||
| June 2013 |