AMC Entertainment (NYSE:AMC) was sued by a shareholder, demanding it hold its annual meeting by Aug. 18.
That will prove difficult as the dispute over converting AMC Preferred Equity Units (NYSE:APE) into common stock remains unresolved.
AMC stock oped this morning at $4.36 per share, a market capitalization of $4.13 billion. APE at $1.86 per share, also a market cap of $4.13 billion. AMC stock is up over 10% in 2023, on hopes the public will return to theaters following the Covid-19 pandemic.
A Cliffhanger Ending
The suit in Delaware’s Chancery Court comes from Kevin Barnes, who holds an equal number of APE and AMC shares. The suit is before the same court that approved the conversion. AMC settled in May with an investment fund and individual investor who challenged the conversion agreement, which discounts the number of common shares APE holders will get. The settlement gives AMC shareholders an extra $129 million worth of stock in the conversion.
Even if the settlement is approved, AMC is still in big trouble. A strike by writers and (now) actors could soon leave AMC without anything to show. Walt Disney (NYSE:DIS) will re-release some of its old films to theaters, and Fathom Events, partly owned by AMC, offers non-Hollywood shows and re-releases of classic movies.
But the 2023 summer box office remains behind last year. Studios warn that if the strike goes beyond Labor Day, it will impact their release calendar for 2024.
There is some good news. Mission Impossible – Dead Reckoning Part One did over $50 million in business last weekend. Barbie and Oppenheimer both look set to be hits.
AMC Stock: What Happens Next?
A final settlement in the shareholder disputes, while good news, will not get AMC out of trouble. The theater chain needs hit movies, and the movie industry needs AMC.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
