Any investors looking for a verdict on the AMC Preferred Shares (NYSE:APE) resolution may soon have their answer. According to Seeking Alpha, a date has been set for a hearing on the subject between June 29-30. Specifically, it will be on AMC Entertainment’s (NYSE:AMC) plan to convert APE units to common stock shares to generate equity. While AMC stock is rising today, APE has been trending downward all morning.
News of the pending hearing probably isn’t affecting either one too much. However, it is worth a closer look to see how much of an impact the decision will have as this key date approaches.
What’s Happening With AMC Stock
Despite some early trading volatility, AMC stock remains in the green today. As of this writing, it is up 1%, though its trajectory makes it hard to predict which way it will move. APE, by contrast, has been in a race to the bottom all day, falling almost 5% before making a halfhearted rebound in the early afternoon to about 3%.
Earlier in the month, investors saw the same scenario play out when the company failed to reach a settlement with shareholders. Per Barron’s:
“Shareholders suing AMC over its issuance of APE units settled with the company earlier this week, but Delaware Chancery Court Vice Chancellor Morgan T. Zurn denied a request by the shareholder group to lift a status quo order. The order temporarily prevented AMC from following through on measures approved by its stockholders last month that would increase its common stock authorization, convert APE shares into common shares, and reverse-split every 10 AMC shares into one.”
Following this news, AMC stock soared as APE plunged. Now these patterns are repeating as AMC looks toward finally seeing the matter resolved. However, InvestorPlace‘s Louis Navellier advises investors to proceed with caution when it comes to AMC stock. As he sees it, the approval of the reverse stock split and share conversion is likely to negatively impact AMC due to the risk of further share dilution. While shares are up today, that doesn’t mean they will keep growing if the conversion motion passes.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
