AMC Entertainment Holdings Inc.’s stock fell 1.7% premarket Monday, after Citigroup opened a downside 30-day catalyst watch for the stock.
The move comes as investors await a chancery court decision that’s expected to clear the way for the company to convert its AMC Preferred Equity units
APE,
known as APEs, into common stock. The APEs were unchanged in premarket trades Monday.
Related: AMC shares fall, while APE units rise as stock-conversion battle reaches Delaware Chancery Court
AMC
AMC,
shareholders voted in support of the company’s proposal to convert the APEs in March, but the company was then hit with a class-action lawsuit. AMC subsequently reached an agreement to settle the court fight but a chancery judge must approve the settlement proposal after a two-day hearing last week. A ruling is expected within weeks, according to the Wall Street Journal.
On Thursday an AMC shareholder opposed to the settlement told the court that some investors felt the cinema chain had “stabbed them in the back,” Reuters reported.
Related: AMC shares make biggest gain in nearly three months ahead of stock-conversion hearing
Citigroup is expecting a ruling in favor of the proposal. “As a result, we would expect the value of AMC common units and APE units to converge,” analysts wrote in a note. “Given AMC’s common units trade at a premium to the APE units, we would expect downward pressure on AMC shares in the coming days.”
Last week shares of AMC made their biggest gain in nearly three months ahead of the stock conversion hearing. Shares of the movie-theater chain and meme-stock darling have risen 8.1% in 2023, while the APEs have risen 23.4%.
Related: Largest investor in AMC’s APE stock sells again, cuts stake to below 10%
Of eight analysts surveyed by FactSet, three had a hold rating and five had a sell rating for AMC.
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