(Reuters) — AMC Entertainment Holdings Inc. will face an April 27 hearing in a lawsuit alleging it bypassed shareholders opposed to adding more shares, a Delaware Court of Appeals judge ruled on Monday.
AMC common stock was up as much as 28% Monday afternoon, while preferred stock was down about 4%.
Vice Chancellor Morgan Zurn will hear from AMC investors who have accused the movie theater chain and several of its executives of violating state law by creating preferred stock in an effort to “discard” the voting rights of common shareholders who had not supported issuing new shares.
Shareholders are scheduled to vote on March 14 on whether to convert preferred stock into common stock and authorize AMC to increase its common stock.
The common shareholders who sued the company on February 20 agreed with the company that the vote can go ahead but that AMC will not act to increase the shares until the judge rules.
AMC became a “meme stock”; during the Covid-19 pandemic, raising more than $2 billion in 2021 as retail investors flocked to its stock and others such as GameStop Corp., which short sellers had bet against.
AMC last year created preferred stock, which trades on the New York Stock Exchange under the symbol “APE.”
A pension fund and two individual investors who have sued said in their proposed class action that the creation of preferred stock was an effort to stop running around common shareholders.