AMC Stock: Judge Denies APE Deal and AMC Stock Surges 67%

A judge on Friday blocked a proposed settlement on AMC Entertainment Holdings' (AMC.N) stock conversion plan that would allow the company to issue more shares, sending its common shares soaring and preferred shares down in after-hours trading.

Delaware Vice Chancellor Morgan Zurn said in the ruling that she cannot approve the deal, which would provide AMC common stock holders with shares worth an estimated $129 million, because it would also settle potential claims by preferred shareholders who were not represented in the lawsuit.

The judge didn’t provide much of a reason, other than to say that “the settlement cannot be approved as submitted,” according to Bloomberg.

AMC stock had surged 71% to $7.52 at 5:27 p.m., while APEs—short for AMC Preferred Equity—dropped 17% to $1.50. This isn’t the first time, though, that a judge has denied requests from AMC.

The drama surrounding the conversion of AMC Preferred Equity units (APEs) into AMC Entertainment  (AMC) - Get Free Report common shares took a surprising turn on Friday, July 22, when Delaware Judge Vice Chancellor Morgan T. Zurn denied the settlement with the plaintiff, blocking the conversion, which surprised investors.

Earlier, there had been a high expectation that the Delaware Court would approve the settlement and proceed with the conversion, as the special master indicated favoring "denying the objections to the settlement."

The agreement’s precise value, which is upwards of $100 million, had fluctuated with the company’s stock price. AMC shares were trading at $8.80 after closing at $4.40. The APE units, meanwhile, sank as much as 63% to $0.67.

Mark Lebovitch, one of the lead attorneys for the investors who negotiated the settlement, said his clients “are carefully considering the court’s detailed opinion and are considering all of their options.”

The ruling sends the case—and the company, which is anxious to recapitalize—back to the drawing board. AMC has been eager to convert the APEs and issue additional shares as it contends with rising interest rates that have complicated its loan financing.

The judge flagged similar concerns during the settlement hearing in late June, expressing skepticism that Delaware’s corporate laws allow shareholder settlements to waive claims on an investor-by-investor rather than share-by-share basis.

Read more

Sarah H

Also on site :

• The Supreme Court Cast Its Lot With Trumpism. It Should Be Very Worried.
• UN renews Sudan ceasefire appeal over ‘unimaginable suffering’ of civilians
• Israeli forces continue ceasefire violations with attacks across Gaza