Judge Nixes AMC Entertainment Shareholder Settlement
deadline.comIn a contorted legal case, a Delaware judge today struck down a settlement that would have helped AMC Entertainment move ahead with steps to raise cash and shore up its stock. “To cut to the chase, the settlement cannot be approved as submitted,” Judge Morgan Zurn of Delaware Chancery Court wrote in a 69-page opinion released today.
Her ruling followed several days of hearings earlier this summer in a suit initially brought by a group of AMC investors who challenged the company’s plans to convert preferred equity into common stock.
The exhibitor and the shareholders subsequently reached a settlement in the case but that required the judge’s approval. Long and short: If AMC has to raise cash in a pinch, it will need to sell AMC Preferred Equity units, or APEs, which are worth much less than its common stock.
The APEs fell 14% to $1.54 in late trading today. AMC common shares surged 63% to $7.17 after what could, however, become a problematic ruling for the chain.
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