AMC Stock Craters Following APE Conversion Settlement


  • AMC Entertainment (AMC) settled a lawsuit against its reverse split and conversion of preferred AMC Preferred Shares (APE) to common stock.
  • The settlement is worth $100 million to AMC shareholders, who are taking additional stock in the exchange.
  • It’s a big win for AMC CEO Adam Aron — and for Hollywood studios that need theaters to exhibit their movies.
AMC stock - AMC Stock Craters Following APE Conversion Settlement

AMC Entertainment (NYSE:AMC) fell 22% overnight after it settled shareholder litigation that will let it convert its AMC Preferred Shares (NYSE:APE) to common stock. The APE shares rose 18%.

AMC is due to open April 4 at $3.75 per share, APE at $1.75. The market capitalization on the two issues are now identical, and they reflect the same asset.

Shareholders approved management’s plan for the reverse split on March 14, along with an increase in the number of shares that can be issued. The split was held up pending the lawsuit.

AMC Stock Update: Aron Wins

The settlement is a big win for AMC CEO Adam Aron — and for management in general.

While AMC will be handing some shareholders more value than others in the reverse split,  Aron was in the end able to create more equity in defiance of shareholder resistance.

The agreement isn’t a precedent, but it should allow other embattled managements to exceed listed share limits when companies get into trouble.

AMC, the largest movie chain in the U.S., has been in trouble since the start of the Covid-19 pandemic in 2020. The pandemic closed all of its theaters, and traffic has not come back. AMC’s 2022 revenue of $3.9 billion was 28% below its 2019 revenue of $5.4 billion. Net losses have ballooned from $150 million in 2019 to almost $1 billion last year.

AMC survived thanks in part to small “meme stock” traders, who bid the stock’s price up in early 2021 to squeeze shorts who saw opportunity in the business’ collapse. Those traders who stayed in the stock after the squeeze ended lost money. But Aron still convinced many to buy the new APE preferred when cash ran short.

During the controversy, Aron also began offering non-fungible tokens (NFTs), whose value has since collapsed. The chain is also selling a version of its theater popcorn through Walmart (NYSE:WMT)

What Happens Now

Aron must still find a way to generate profits from his theaters. He will do so in a less competitive environment. Rival Cineworld was taken over by its creditors on April 3 after failing to find a buyer in bankruptcy.

On the date of publication, Dana Blankenhorn held no positions (directly or indirectly) in any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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