AMC Entertainment Holdings Inc. has submitted a revised proposal for its stock-conversion plan. The plan aims to address the concerns raised by the Delaware Chancery Court, after a settlement was rejected by a judge last week.
In a letter to investors shared on Twitter, AMC Chief Executive Adam Aron announced that a modified proposal was filed with the court on Saturday. Aron expressed his hope that the plan would be approved by the court and implemented promptly.
AMC, the popular movie-theater chain, is looking to convert its preferred units known as APE (AMC Preferred Equity) into common stock. This move is part of the company’s efforts to eliminate debt. However, Vice Chancellor Morgan Zurn of the Delaware Chancery Court declined to approve the settlement with the opposing shareholders that would have allowed the conversion to proceed. As a result, AMC shares soared by more than 60% in after-hours trading on Friday.
Aron emphasized the importance of raising equity capital for AMC in his letter. He warned that failure to do so could increase the risk of cash depletion by 2024 or 2025. Aron cited the bankruptcies of rival theater chain Cineworld/Regal and retailer Bed Bath & Beyond as cautionary examples.
Despite facing challenges, AMC shares have shown a year-to-date increase of 8%. However, they have experienced a significant decline of 54% over the past 12 months.