The movie theater company AMC has reached a settlement regarding the lawsuit filed against it, the settlement brings the company one step closer to completing the plan to convert APE shares to ordinary shares and thus possibly succeed in raising more capital.
AMC said it reached a binding settlement with some of its shareholders who claimed that the issuance of APE shares, which represent one hundredth of a preferred share and have the same voting power as a common share, was an attempt to override their will and could dilute their holdings. The preferred shares have lost more than 70% since they were issued in August as part of the company’s debt repayment plan. In 2021 the company raised $1.8 billion by issuing common stock to take advantage of the frenzy that occurred in the stock after it became a meme stock.
Recall that a few weeks ago we reported that some of the shareholders were not satisfied with the process of issuing the APE shares and decided to sue the company, claiming that the sale of the shares eliminated the voting power of the ordinary shareholders who could have opposed the latest moves. In response, the company agreed to wait with the conversion and forwarded the decision to the court to rule on the matter.
The settlement clears the way for AMC to raise capital that could reach $16 billion. Now the company can urge the court to lift an injunction against it that would allow it to carry out its plans to increase the total number of common shares and carry out a one-for-10 reverse stock split to convert shares APE to AMC. If AMC’s stock swap plan is approved by the court, it would provide “a way to significantly reduce debt and even eliminate it” by raising capital, analyst Eric Wald said.
AMC’s stock trades at a value of $2 billion after falling 83% in the past year, on the other hand, the company’s APE stock trades at a value of $5 billion and has risen 13% since the beginning of the year.
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