The story of how theater chain AMC (NYSE:AMC) came to create the AMC Preferred Equity (NYSE:APE) unit and how the two now look to reconcile is a long and strange one that’s actually still going on. But the APE finished higher today, while AMC itself fell over 6% as the latest development emerges.
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In summary, AMC looked to convert the APE and then use a reverse stock split to issue shares. But a class action lawsuit put the kibosh on such a move, and AMC tried to counter that lawsuit by offering a binding settlement. Now, in the latest news, the settlement offer was quashed by Delaware’s Vice Chancellor Morgan Zurn. That sounds like a problem, but much of Zurn’s problem with the settlement seems to focus on procedural matters rather than anything fundamentally wrong with the arrangement. Thus, attorneys for both parties requested a “status conference” to try and get the matter settled.
This news hurt AMC somewhat, but AMC also had some recent successes that could help give it a leg up going forward. It recently revealed a record-breaking Easter weekend and also bought in on National CineMedia (NASDAQ:NCMI) after previously selling off its shares. With National CineMedia looking to bankruptcy proceedings, AMC may have just picked up a major cinema advertising platform for fire-sale prices.
AMC isn’t doing well with analysts right now, however. Currently, analyst consensus calls AMC stock a Moderate Sell, with two Hold ratings and three Sells. Worse yet, its average price target of $2.15 gives it 57.97% downside risk.
