Shareholders of AMC Entertainment Holdings Inc. voted overwhelmingly in support of the company’s proposal to convert AMC Preferred Equity units into shares of common stock Tuesday.
AMC’s AMC, -15.02% stock, which was repeatedly halted for volatility Monday, fell 13.8%. APEs APE, -5.20% rose 9.3%.
In January, AMC announced the special meeting of shareholders to increase the number of AMC-authorized shares from just over 524 million to 550 million and to authorize a 1-for-10 reverse split of the company’s common stock, converting APEs into shares common stock. The move is part of the company’s ongoing battle to eliminate debt, but it is facing court proceedings.
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According to the preliminary results, some 88% of votes were cast in favor of the company’s proposal to increase the number of shares. The proposal on authorizing a reverse stock split was carried with 87.3% of votes cast in favor. Both AMC and APE stockholders voted on the proposals.
Speaking at the special shareholder meeting AMC CEO Adam Aron lauded what he described as a “landslide victory.” The CEO commended the company’s shareholders for “the wisdom” they exhibited in their voting.
“I would like to thank our participating shareholders for your support of AMC and your judgment and support in your voting today,” Aron added. “You gave us the tools we need to fight the good fight on your behalf.”
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Aron also reiterated the company’s desire to fight the legal challenge it is facing. In February, the Allegheny County Pension Fund filed a lawsuit against AMC in the Delaware Court of Chancery, alleging that AMC’s issuance of APEs circumvents the will of shareholders who want to prevent further share dilution.
“As previously disclosed, we will vigorously oppose claims,” he said. “Your vote today, in favor of our proposals, sends a very strong signal that we’re doing exactly what you wish,” he said.
The CEO explained that AMC is unable to implement the proposals voted on today, pending a ruling by the court. The court has scheduled a hearing for April 27, 2023. “We will keep you updated as we have more information,” he added.
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Over the past two years, AMC has been on a roller-coaster ride that took it from beleaguered pandemic victim to meme-stock phenomenon. AMC used the steep rise in its share price to tap into equity and debt markets, raising $917 million in January 2021.
Of eight analysts surveyed by FactSet three have a hold rating and five have a sell rating for AMC.
This article was originally published by Marketwatch.com. Read the original article here.