AMC Entertainment Holdings increased its premarket trading on Monday after a judge blocked the cinema chain’s stock swap plan, threatening to dilute investors’ interests in the company.
AMC common stock, which is heavily shorted, was the most traded of any stock traded before the opening bell at 5:58 a.m. ET, rising 59% to $6.99. Preferred shares “APE” fell 2.8% to $1.75.
The stock trended on investor-focused social media stocktwits.com, signaling interest from retailers.
A Delaware judge said Friday she could not approve a deal that would potentially give current shareholders additional shares worth $129 million because it would also settle potential claims of preferred shareholders who were not represented in the lawsuit.
AMC investors had sued the company in February, alleging that a plan to convert preferred stock into common stock had been created to circumvent the wishes of common stock holders who objected to the issuance of new shares.
The company has filed a revised stock conversion plan petition that addresses the Delaware court’s concerns about other shareholders, CEO Adam Aron said Sunday.
The lawsuit is a hurdle for the company with a high cash burn rate, as it plans to pay off some of its $5.1 billion debt by selling more shares and potentially avoiding bankruptcy.
The critically acclaimed ‘Barbie’ and ‘Oppenheimer’ films have attracted large audiences around the world after sluggish ticket sales in June and July. Domestic ticket sales for all films combined exceeded $300 million in the United States and Canada for only the fourth time in history, according to studio estimates on Sunday.
About 28% of AMC’s free float is short, according to an estimate from analyst firm Ortex.
Some other retail investor favorites also gained. GameStop rose 3.6%, while Koss Corp rose 15%.
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