The ongoing struggle between AMC Entertainment (NYSE:AMC) and the AMC Preferred Equity units (NYSE:APE) continues, though there are signs it may finally be approaching a resolution. With AMC down somewhat in Thursday’s trading session and APE units up over 4% at one point, it’s starting to favor the APE. The latest developments began in Delaware, where the Court of Chancery began a new two-day session designed to settle a key legal argument that might settle the matter entirely. It got 15 minutes into the session before a fire alarm rang. That prompted an evacuation, and from there, shut down the hearing altogether with no restart seemingly scheduled. However, reports from Seeking Alpha suggest that the hearing will adjourn by 3 PM Eastern Friday. After that, at some point, will come the written decision from Delaware’s Vice Chancellor Morgan Zurn.
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The decision is commonly regarded as a high-stakes matter, and with good reason. AMC’s CEO first began selling the APE unit back during COVID-19, when AMC enjoyed status as a “meme stock.” The APE was designed as a way to circumvent limits on outstanding shares. Now, however, the APEs want APE to become actual shares, and current shareholders aren’t interested in such a major dilution at all. And, with Antara Capital once again selling off APE units to lower its stake under 10%, that’s added yet another level of confusion to the situation.
Currently, the APE is worth close to half of what AMC itself is, and APE narrowed the gap today. But AMC is also the only one with an analyst consensus on its side. The bad news there is that the consensus is Moderate Sell, and with an average price target of $2.16, AMC stock comes with 50.29% downside risk.
