AMC Entertainment shares soared Thursday while AMC's preferred equity units tumbled after Delaware's Court of Chancery ruled Wednesday night against fast tracking a proposed settlement with shareholders that would allow a capital raise for the theater chain and meme stock.
Late Monday, AMC Entertainment, in its SEC filing, disclosed a binding settlement with plaintiffs in the shareholder lawsuit regarding the movie theater chain's stock conversion plan. Plaintiffs would get common shares. In return, AMC and the plaintiffs would request that a "status quo order" be lifted, allowing for the conversion of APE stock into AMC stock. AMC also would be allowed to carry out a 1-to-10 reverse stock split and have the right to sell more shares.
But lifting the status quo order needed court approval to forgo the usual process. But Court of Chancery Vice Chancellor Morgan Zurn ruled against that Wednesday, saying AMC Entertainment is moving too fast.
AMC's lawyers had argued that the settlement was contingent on the status quo order being lifted.
AMC Entertainment issued AMC Preferred as a way to raise more capital without directly issuing more AMC common shares.
AMC stock leapt 21% to 4.90 on Thursday. APE stock tumbled 13% to 1.49.
On Tuesday, AMC stock plunged 23% on the share conversion settlement. APE stock leapt 13.5%.
In theory, APE stock should be worth the same as AMC stock.
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