The AMC Entertainment Holdings Inc (NYSE: AMC) stock price plunged 33.7% at 7:57 EST after a Delaware judge approved the revised stockholder settlement on Friday. The judge who had rejected an earlier deal also did not allow shareholders to opt out of the deal, saying that such a move would be detrimental to the company.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
AMC now has the go-ahead to convert its preferred shares trading under the ticker symbols APE into its common shares, which explains why APE shares were trading up 29.21%, while AMC shares were down 28.52% at writing.
Top Broker Recommendation
- XTB UK regulated by the FCA – Read our Review
- Admiral Markets More than 4500 stocks & over 200 ETFs available to invest in – Read our Review
- BlackBull 26,000+ Shares, Options, ETFs, Bonds, and other underlying assets – Read our Review
- eToro Wide range of instruments available to trade – Read our Review
- IG Top-tier regulation – Read our Review
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
The deal requires AMC to provide shares worth $129 million of its common stock to settle potential legal claims related to a stock conversion plan. All shareholders are bound to the plan after the judge reiterated that such a move was not feasible and would jeopardize the company’s future.
AMC is the outright winner in the settlement, followed closely by APE holders, who will now have the opportunity to convert their preferred shares into common shares with voting rights. The company told the court that it was burning through cash at an alarming rate and was in dire financial straits.
However, the shareholders who had opted out of the deal claimed that AMC’s finances were okay and that it was not in dire straits. Over 2,800 investors had petitioned the judge to opt out of the settlement to sue AMC separately.
The class action settlement approved by Delaware Vice Chancellor Morgan Zurn settles all claims by the ordinary shareholders. The settlement was approved after AMC removed the portion of settling claims by preferred shareholders that were not part of the initial lawsuit.
AMC was sued in February for allegedly rigging a shareholder vote to allow it to convert preferred stock into common stock and issue hundreds of millions of new shares. The company noted that the conversion would help pay down some of its massive $5.1 billion debt.
Under the approved settlement, common stockholders would own 37.15% of the company’s outstanding shares, while preferred shareholders would own 62.85%.
AMC Entertainment (AMC) stock price.
The AMC Entertainment stock price was trading down 33.65% at $3.49 after falling from Friday’s closing price of $5.26.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
