AMC Stock Floods 38% After Court Rejects Stock Transformation Plan
AMC Diversion shares rose 37% on Monday after a court ruling blocked their plan to convert preferred stock to common stock and issue new shares.
Delaware Judge Morgan Zorn struck down the stock conversion plan aimed at eliminating debt but would have diluted shareholder value.
The plan was intended to settle a lawsuit filed in February over the stock change, but it faced opposition from many preferred investors.
AMC presented a revised plan to the court on Saturday in response to the ruling, but details have not been disclosed
AMC is known as a "meme stock," benefiting from online entertainment crazes and having unpredictable swings due to its unique investor base.
In mid-2021, retail investors on Reddit's r/wallstreetbets boosted AMC's stock price, helping the company raise capital and avoid bankruptcy.
CEO Adam Aron hopes the revised stock change plan will help AMC raise the necessary funds to address its debt situation.
The spike in AMC's share price followed a successful weekend at the U.S. box office with strong performances from movies like Warner Bros.' Barbie and Christopher Nolan's Oppenheimer.
AMC had its best weekend since 2019, with 7.8 million global moviegoers, indicating a positive trend for the cinema industry after the pandemic disruption.