AMC wants to increase its number of authorized shares
Angela Weiss / AFP via Getty Images
AMC Entertainment
stock tumbled 25% early Tuesday but its preferred shares soared more than 30% as the movie-theater operator said it reached a settlement with shareholders over its planned stock conversion.
The settlement paves the way for the company to complete its plan to convert its AMC Preferred Equity, or APE, units into shares of common stock.
APE units began trading in August, after the firm provided each AMC shareholder with one APE unit for each common share they owned. But because APE units can’t currently be converted to AMC shares, they have traded at a steep discount.
The proposal, which also includes increasing the number of authorized shares and a 10-to-1 reverse stock split, was approved by shareholders last month but has faced court proceedings.
The litigation was brought by a group of shareholders, who argued the move diluted existing common stockholders without any compensation in return. The terms of the settlement, announced in a filing by AMC late Monday, will see common stockholders receive one share for every 7.5 shares held after the reverse stock split. The payment would represent around 4.4% of AMC’s stock, or 6.9 million shares.
Lawyers for the plaintiffs estimated common stockholders would receive shares valued at more than $100 million through the settlement, in a separate release late Monday.
“The settlement provides investors with additional shares in satisfaction of their voting claims, while allowing the company to move forward with its plan to pay down its debt,” plaintiff lawyers from Bernstein Litowitz Berger & Grossmann, Grant & Eisenhofer, Fields Kupka & Shukurov, and Saxena White said in a joint statement.
Write to Callum Keown at [email protected]
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