AMC Shareholders Vote To Convert APE Units, Approve Reverse Stock Split
AMC Entertainment (NYSE: AMC) fell over 15% yesterday following a decision by shareholders to approve a reverse stock split, as well as an increase to the permitted share count.
The reverse split will see shareholders of the company receive one post-consolidation share for every ten pre-consolidation shares held, amounting to a one for ten reverse split.
READ: AMC Defends Push On Tiered Seating Prices As Firm Records Wider Losses
More significantly however, a proposal to increase the firms share count was approved. As part of that proposal, AMC will be able to convert its AMC Preferred Equity units, or APE’s as they’re more commonly known, into common stock of the company, simplifying its share structure. The measure passed with 88% approve from shareholders.
With the approval to increase its share count, the company will be able to continue to raise cash to fund its operations, while at the same time diluting its current shareholders.
The implementation timeline for the changes to the firms share structure remains up in the air however as a result of a class action lawsuit filed against the company. The lawsuit claims that the company went against shareholder wishes by issuing the APE units, after it had lost a vote to expand the share count of its common stock. A hearing for the class-action lawsuit is currently scheduled to occur in late April.
AMC Entertainment last traded at $4.64 on the NYSE.
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