AMC Entertainment Holdings Inc.’s stock rose 2.3% before market open Wednesday, after ending Tuesday’s session down 23.5%.
In a filing Monday, AMC
AMC,
+1.41%
announced settlement terms related to shareholder litigation over a proposed stock conversion. The settlement opens the way for the conversion of AMC Preferred Equity units
APE,
-1.01%,
or APEs, into common stock, alongside a 10-to-1 reverse stock split and the capacity to sell more shares. The move, which is part of the movie theater chain and meme stock darling’s ongoing battle to eliminate debt, had faced court proceedings.
The APEs, which ended Tuesday’s session up 13.5%, rose 0.6% before market open Wednesday.
Last month, AMC shareholders voted in support of the company’s proposal to convert AMC Preferred Equity units into shares of common stock in what the company’s CEO Adam Aron described as a “landslide victory.”
In a note released Tuesday B. Riley Securities analyst Eric Wold said that the settlement clears the decks for a “potentially massive” equity raise that could generate as much as $16 billion. “Should the conversion of APE units to AMC common shares be permitted to proceed — along with the increase in authorized common shares and 1-for-10 reverse stock split — we continue to see a positive path for the company to raise significant amounts of capital.”
AMC describes itself as the largest movie-theater company in the world, with approximately 950 theaters and 10,500 screens across the globe.
Over the past two years, AMC has been on a roller-coaster ride that took it from beleaguered pandemic victim to meme-stock phenomenon. AMC’s stock is down 3.9% in 2023, outpacing the S&P 500 index’s
SPX,
-0.19%
6.8% gain, while the APEs have risen 19.2%.
This post was originally published on Market Watch
