© Reuters. FILE PHOTO: Closed signs are seen on an AMC Theatre during the outbreak of the coronavirus disease (COVID-19), in New York City, U.S., April 29, 2020. REUTERS/Brendan McDermid/File Photo
(Reuters) -AMC Entertainment CEO Adam Aron said on Sunday the company filed a revised petition for a stock conversion plan to address the Delaware court’s concerns over other shareholders.
AMC had proposed a plan to allow it to convert preferred stock to common stock and issue millions of new shares. It was sued in February by investors over how the shareholder vote on the plan was conducted.
Delaware Vice Chancellor Morgan Zurn on Friday denied approval to a settlement which would provide AMC common stock holders with shares worth an estimated $129 million, since it would also settle potential claims by preferred shareholders who were not represented in the lawsuit.
“Yesterday we along with the plaintiffs, filed with the Delaware Court, a modification of the legal release surrounding the settlement of the Delaware litigation in an effort to address the Court’s voiced concern,” Aron said in an open letter to investors.
Reuters could not immediately obtain the newly filed court documents while lawyers for the investors and AMC did not immediately respond to queries.
AMC had previously warned of burning cash at an unsustainable rate and said it could not carry out its capital raising plans until the litigation had been resolved.
If AMC was unable to raise equity capital, there would be an increased risk of the company running out of cash in 2024 or 2025 or being unable to satisfactorily refinance and stretch out the maturity of some of its debt, Aron’s letter added.
The investors who sued alleged that AMC had enacted the plan to circumvent the will of common stock holders who opposed the company diluting their holdings.
The proposed settlement had received more than 2,800 objections from shareholders, a level of interest Zurn called “unprecedented” during Friday’s ruling.
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