AMC Issues Statement Following Delaware Court Ruling
AMC Entertainment saw its stock price fall on Monday. This followed the ruling of a Delaware court that allowed the company to convert its preferred equity shares into common shares.
Shares for AMC dove about 35% on Monday (via Deadline), bringing the company’s stock to its lowest levels since January 2021. The move comes as a Delaware Chancery Court judge approved a settlement that allows AMC Entertainment to convert its “AMC Preferred Equity” (APE) shares into common shares of the company.
Alongside that news, AMC will also be issuing a 1-for-10 reverse stock split (meaning if you had 10 shares in the company, you now have 1) in order to permit the conversion of all shares.
The move itself was originally voted on in a shareholder election in March 2023. However, it’s just being decided now after a group of retail investors sued AMC to try and stop the move. The lawsuit alleged that the move would dilute the existing AMC stock, but they were unsuccessful in their attempt to stop the merger.
In a statement on the move, AMC Entertainment Chairman and CEO Adam Aron confirmed that the move would be happening “immediately,” and that the company was excited to begin the transition. Aron said that with the move now official, he believes AMC is “on the right path,” and can now begin raising “additional equity capital” in an effort to “shore up our cash reserves, pay down debt, invest in growth initiatives to strengthen our operating profitability and pursue transformative merger and acquisition opportunities.”
Aron also outlined steps the company plans to take in order to be more profitable and successful in the future. Specifically, Aron notes that without raising equity over the past three years, AMC “simply would not have
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