AMC Entertainment Holdings Inc (NYSE:AMC) shares are trading lower. The company's APE stock conversion was upheld on Wednesday by Delaware's highest court.
What Happened: Chief Justice Collins J. Seitz Jr. signed a court order on Wednesday affirming a prior ruling to allow AMC to move forward with its stock conversion to AMC Preferred Equity units, or APE units, according to Bloomberg.
AMC declared a special dividend in the form of AMC Preferred Equity units in 2022 to slide by share limits for raising capital without approval from shareholders. AMC shareholders expressed concerns about dilution from day one and pushed back against the move.
In 2023, AMC proposed a settlement with shareholders to allow for the conversion of APE units into common shares. The proposed plan also included a one-for-ten reverse stock split. After some back and forth, the Chancery Court ultimately approved AMC's revised stock conversion plan. Delaware's highest court upheld that ruling in a one-page order this week.
"After careful consideration of the parties' briefs and the record below, and following oral argument, we find it evident that the judgment of the Court of Chancery should be affirmed on the basis of and for the reasons stated in the Memorandum Opinion and Order dated August 11, 2023," the court order states.
AMC shares have been volatile in recent weeks amid a resurgence of interest in meme stocks. The volatility was sparked by the social media return of Keith Gill, a GameStop Corp (NYSE:GME) trader best known as "Roaring Kitty."
Gill is often credited with sparking the meme stock mania of 2021 that saw traders across Reddit's r/WallStreetBets relentlessly buy shares of GameStop and AMC, which ultimately led to short squeezes in the stocks.
Following the surge in AMC shares last week, the company entered into agreements to issue stock in exchange for notes. AMC also recently said it raised approximately $250 million of new equity capital through the sale of 72.5 million shares from an offering it launched in March.
AMC will hold its annual shareholder meeting on June 5.
AMC Price Action: AMC shares were down 2.18% at $4.55 at the time of publication, according to Benzinga Pro.
Photo: Paul Sableman from Flickr.