Shares of AMC Entertainment (NYSE:AMC) stock are in full focus. The hearing to consider converting all AMC Entertainment Preferred Equity Units (NYSE:APE) into AMC stock has been scheduled for June 29 and 30 at the Leonard L. Williams Justice Center in Wilmington, Delaware. Earlier this year, shareholders of AMC and APE voted in favor of increasing authorized shares to 550 million from 524.17 million and an AMC 1-for-10 reverse stock. Together, these two proposals would allow for the conversion of APE into AMC.
However, two putative class actions put a halt to the conversion and the approved proposals. The two class actions, Allegheny County Employees’ Retirement System v. AMC Entertainment Holdings, Inc. and Munoz v. Adam M. Aron, et al., claimed that APE and AMC shareholders should vote separately on company proposals or that APE shareholders should be enjoined from voting on AMC proposals. These two class actions were later consolidated as one.
Dear AMC Stock Fans, Mark Your Calendars for June 29
As a result of the class actions, a status quo order was placed on AMC that prevented it from moving forward with the approved proposals and conversion. On April 2, AMC entered into a binding settlement term sheet with the plaintiffs to lift the status quo order and settle the case. On April 3, the plaintiffs filed a motion to lift the status quo order, but the court rejected it.
What’s known for sure, however, is that CEO Adam Aron is in favor of the conversion and proposals:
“If implemented, AMC should have an ability to raise a significant amount of equity capital in the months and years ahead. Winning these shareholder votes by such a lopsided margin is a powerful vote of confidence to allow AMC to raise equity capital, reduce debt, strengthen our balance sheet and continue our transformation.”
Meanwhile, the movie theater chain announced its first-quarter earnings last week. Revenue tallied in at $954.4 million, up by 21.5% year-over-year, beating the analyst estimate for $948.5 million. However, profitability remains a step away, as net loss totaled $101.9 million, improving from $235.5 million a year ago.
On the date of publication, Eddie Pan 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.
