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AMC Entertainment Stock (New York Stock Exchange: AMC) is in flux again Wednesday night when the Delaware Court of Chancery rejected a proposed agreement between AMC and shareholders designed to allow a series of transactions leading to a capital increase.
AMC shares (AMC) were up to 6.7% aftermarket, while AMC’s preferred capital units (BUN) were down 12.9% after hours.
in a decision Issued late Wednesday, Vice Chancellor Morgan T. Zurn ruled: “I am writing to resolve the plaintiffs’ unopposed motion to lift the standstill order due to the parties’ proposed settlement…the motion is denied.”
AMC shares had fallen on Tuesday and AMC’s preferred equity units (APEs) rose as a proposed deal sought to remove a hurdle from a plan AMC put in place to convert the APEs into AMC common stock, implement a Reverse stock 10 for 1 split, and then seek a capital increase to get more capital.
That meant an additional payment of common shares to shareholders. But essentially, the court found that AMC was moving too quickly according to the rules to make its transactions.
“The parties seek to lift the standstill order to allow Defendants to complete their settlement obligations before the settlement is notified, considered and approved,” the ruling stated. “This Court has cautioned against parties performing even partial settlement obligations prior to a settlement hearing, as doing so prevents the Court from fulfilling its obligation to monitor class action settlements.”
“The parties do not offer good cause to lift the status quo order,” Zurn ruled, adding: “In the absence of a demonstrated need to reorder the established and purposeful order of operations, I must conclude that harm to the class The protections required of 23 adequate notice, opportunity to object, and approval exceed the benefit of receiving the common shares sooner.”
In February, Zurn set an injunction hearing on the lawsuit for April 27.
