AMC shares jump as stock conversion plan halted, preferred shares slide

KOSS

24/07/2023 11:29

July 24 (Reuters) - Meme stock AMC Entertainment
Holdings  AMC.N  soared in premarket trading on Monday after a
judge blocked the theater chain's stock conversion plan that
risked diluting investors' holdings in the company. 
    The highly shorted AMC common shares were the most traded
across all stocks trading before the opening bell at 05:58 a.m.
ET, surging 59% to $6.99. Preferred shares "APE" fell 2.8% to
$1.75.
    The stock was trending on investor-focused social media
stocktwits.com, indicating retail traders' interest.
    A Delaware court judge said on Friday she cannot approve a
deal that would potentially provide current shareholders with
additional shares worth $129 million as it would also settle
potential claims by preferred shareholders who were not
represented in the lawsuit.
    AMC investors had sued the company in February, alleging a
plan to convert preferred stock to common stock was enacted to
circumvent the will of common stock holders who opposed the
issuing of new shares.
    The company filed a revised petition for a stock conversion
plan addressing the Delaware court's concerns over other
shareholders, CEO Adam Aron said on Sunday.
    The litigation is a roadblock for the company with high cash
burn rate as it intends to pay down some of its $5.1 billion in
debt by selling more shares and potentially avoid bankruptcy.
    In a win for theater chains globally, the much-hyped movies
"Barbie" and "Oppenheimer" drew crowds after sluggish ticket
sales in June and July. Domestic ticket sales for all movies
topped $300 million in the United States and Canada for just the
fourth time in history, according to studio estimates on Sunday.
    About 28% of AMC's free float shares are shorted, analytics
firm Ortex estimated.
    Some other favorites among retail investors also gained.
GameStop  GME.N  rose 3.6%, while Koss Corp  KOSS.O  climbed
15%.
    

 (Reporting by Medha Singh in Bengaluru; Editing by Krishna
Chandra Eluri)
 ((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; Twitter: https://twitter.com/medhasinghs;))