HomeFinancial MarketsAMC Common Shares Plunge Following Stock Conversion Settlement

AMC Common Shares Plunge Following Stock Conversion Settlement

The common stock of AMC Entertainment Holdings had a rough after-hours trading session on Monday, losing 26% of its value. The dive came after the company announced a settlement that will allow it to go ahead with converting its preferred shares, listed under ticker APE on New York Stock Exchange, to common shares.

AMC started issuing the preferred stock in late 2022 in an attempt to raise funds and boosts its share count. However, the company’s actions were met with a suit from a group of investors who believed that AMC was trying to curb the voting power of common shareholders.

As a result of the settlement, the plaintiffs will receive one share for every 7.5 shares they own. The value of the agreement is expected to be north of $100 million.

While the APE stock initially provided a boost to the company, the preferred shares ended up losing more than 70% of their value following the creation. This prompted a decision in March to convert the preferred shares into common shares, followed by a reverse stock split.

AMC common stock fell down to $3.78 per share in after-hours trading compared to Monday’s close price of $5.11. On the other hand, the preferred shares saw a 22% jump in the same period.

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