AMC stock falls after ‘APE’ conversion approved by shareholders

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shareholders for

AMC Entertainment Holdings

The approved measures, pending a decision by a Delaware Chancery Court judge, would substantially alter movie theaters’ ability to increase cash sales stock.

The company said, based on a preliminary count, the shareholders voted in favor of increasing the firm’s stock authorization and converting

AMC

Preferred Equity Units (Ticker: APE) in AMC Common Shares (AMC).

AMC shares fell 13.4% to $4.73 in the immediate aftermath of the vote. APE units, which represent one-hundredth of a preferred share, have the same voting power as common shares. APE units are up 9.3% to $1.89

APE units, each representing one-hundredth of a preferred share, have the same voting power as common shares. They rose 9.3% to $1.89 in afternoon trading Tuesday.

Shareholders also approved a 10-for-1 reverse stock split that was contingent on APE measure passing. Institutional Shareholder Services, the influential proxy voting firm, recommended shareholders vote in favor of the measures.

The vote represents a victory for AMC CEO Adam Aaron, who has turned to unorthodox management techniques in efforts to court the firm’s loyal meme stock base.

“Approving these proposals, and doing so by such a wide margin, is an overwhelming victory that reflects your determination to keep AMC a strong and innovative company and a leader in our industry,” Aron told shareholders.

The company said that 88% of the votes cast approved the first measure, while 11.2% voted against the measure. About 0.8% of the votes were absent.

APE units, which represent one-hundredth of a preferred share, have the same voting power as common shares. APE units rose 7.8% to $1.86 in Tuesday trading, while AMC stock fell 17% to $4.54.

APE units began trading in August, when the firm provided one APE unit to each AMC shareholder for each common share held by them. With the trading of APE units, the AMC was able to sell more of them to raise cash. But because the APE units cannot currently be converted into AMC shares, they trade at a steep discount.

Some AMC shareholders are suing the company, arguing that the sale of APE dilutes the voting power of common shareholders who may oppose increasing the firm’s share authorization. The company agreed not to increase the shares until a Delaware Chancery Court judge rules on the matter. The hearing is to be held on April 27.

Aron said during the meeting that the shareholder vote “sends a very strong signal that we are doing exactly what you want.”

Arron said during the fourth-quarter earnings call that if the vote falls short, the company may be forced to sell more APE shares at a price lower than the combined AMC share price. He said selling the stock helped the firm survive the pandemic lockdown.

Arron said at the time, “We will not be prevented from raising capital, but we will raise capital on much less attractive terms.” “If a majority of our shareholders vote yes, the cost of further diluting the stock is entirely 100% preventable.”

Write to Connor Smith at [email protected]