AMC Stock Alert: When to Expect a Decision on APE Conversion Settlement

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All eyes are on AMC Entertainment (NYSE:AMC) and AMC Entertainment Preferred Equity Units (NYSE:APE), as the two-day settlement hearing discussing the conversion of outstanding APE into AMC stock, an increase in authorized AMC stock, and a 1-for-10 reverse split has wrapped up early ahead of schedule.

This morning, Delaware’s Court of Chancery listened to the objector’s rebuttals concerning the settlement. The court then took a recess before the final objector was scheduled to speak. However, the objector failed to show up, which effectively ended the hearing.

Special Master Corinne Elise Amato had previously issued a recommendation in favor of the conversion. Still, it’s ultimately up to Vice Chancellor Morgan Zurn to make a decision.

AMC Stock Alert: When to Expect a Decision on APE Conversion Settlement

Zurn did not provide a specific date as to when she would make her decision and noted that she would not provide advance notice as well. She did reveal that the decision will not be unveiled next week, which means that AMC and APE shareholders will have to stretch their patience a bit longer.

The litigation began after the Allegheny County Employees’ Retirement System filed a class action complaint against the conversion, arguing that the voice of AMC shareholders were unfairly represented. As a result of the complaint, a status quo order was placed on AMC that prevented them from carrying out the conversion, as well as any approved proposals during AMC’s last special meeting. The conversion would dilute existing AMC shareholders, although it would also help AMC raise equity.

According to The Street, it’s likely that the court will approve the settlement, which involves moving forward with the conversion and proposals, as well as providing common stockholders with one share of AMC for every 7.5 shares owned following a 1-for-10 reverse split.

Between now and the release of Zurn’s decision, shares of AMC and APE will likely be volatile and in the scope of arbitrage traders. Based on the latest available data, AMC had a high short interest of 23.64% as of June 15.

As of this writing, AMC stock is down about 2.3%, while APE stock is up about 1.7%.

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. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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