Judge denies quick settlement of AMC Entertainment shareholder lawsuit

The judge in a case brought by Meme shareholders against AMC Entertainment refused to approve a settlement announced earlier this week that, among other things, would have allowed the publisher to move forward with plans to sell its AMC to convert Preferred Equity Units (APEs) into ordinary shares. convert .

On April 3, AMC entered into a binding settlement agreement with the plaintiffs to settle the lawsuit and seek injunctive relief regarding the status quo in the lawsuit. The settlement, as usual, required the approval of the judge in the Delaware Chancery Court case.

“The court dismissed the motion to overturn the status quo order. Until the court overrules the status quo order, the Company will not proceed with filing the amendment to the Company’s Articles of Incorporation to effect the stock increase and reverse stock split previously approved by shareholders or the conversion of AMC preferred stock units ( monkeys). ).

“The company continues to evaluate next steps,” it added.

Wall Street analyst Eric Wold interpreted Vice Chancellor Morgan Zurn’s decision primarily in terms of the speed of the deal, not necessarily its merits or terms. A preliminary hearing date, previously set for April 27, is still pending, and “we may see some evidence that the judge wanted the schedule to be more complete rather than rush the commutation process,” Wold said. said in a note this morning.

An overwhelming majority of AMC shareholders voted in favor of the measures at a special meeting last month. The proposed conversion, reverse stock split and stock authorization are important to enable the company to shrink its balance sheet and maintain a viable financial position as the box office recovery falters.