AMC Entertainment (NYSE:AMC) has now been hit with a new class action lawsuit following its approved settlement after months of dealing with litigation.
CNBC reports that a holder of APEs said in the lawsuit, which was filed late on Monday but hit the public docket on Tuesday, that APEs investors are being shortchanged in the settlement that was approved on Friday.
AMC did not respond to a request for comment.
AMC agreed to settle its previous class action by holders of common stock by providing them with additional shares worth an estimated $129 million.
The company’s reverse stock split is scheduled to go into effect on Thursday, August 24.
The conversion of APE shares into AMC common stock will occur the following day, Friday August 25.
And the litigation settlement will then take place on Monday, August 28.
Shareholders of common AMC stock had initially claimed that the company rigged a shareholder vote against them.
“The lawsuit adds to months of legal turmoil for the company. Objections to shareholder class action settlements are rare, but AMC received thousands from investors who questioned claims about the companyâs dire finances.
The settlement was initially rejected by a Court of Chancery judge in July before the judge signed off on a revised deal on Friday,” said CNBC.
AMC stock has fallen more than -3% on Wednesday while APE shares have only risen +0.25%.
Despite a new AMC class action lawsuit, hedge fund CEO Bruce Richards now says heâs âsuper bullishâ on AMCâs new APE conversion as the proposed rule is expected to go into effect next Thursday.
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Hedge Fund CEO Now Says Heâs Super Bullish on New APE Conversion
Bruce Richards is the CEO of Marathon Asset Management, which manages a family of investment programs focused on credit strategies including hedge funds, managed accounts, single-client funds and collateralized loan, and debt obligation vehicles.
Richards is rather enthusiastic about AMC Entertainmentâs ability to raise as much as $8 billion, though he states his team thinks $1 billion to $2 billion is more realistic.
âI wouldnât worry about the writers strike, and the box office numbers look like record numbers to us, and greater than pre-covid number, in terms of revenue, so, weâre super bullish, but think about that,â he told Squawk on Tuesday.
âWe can make a +17% return, +10% on the cash, and the +25% price pop on price, and we can make this return, we think itâs a high tang return for taking senior bank debt risk in a very top of capital structure of AMC. We think the smartest play for AMC is actually buying the bank debt which is going to parr, which is offering these staggering returns for the unit of risk that youâre taking.
Richards says that AMC is great company and joked that he tried to get in to see Barbie and Oppenheimer but that he was turned away at the door twice due to tickets being sold out.
âI will go before the summer is over, I promiseâ, he stated.
Richardsâ optimism certainly brings forth an excitement that hasnât been seen in quite some time.
Will this APE conversion trigger an AMC short squeeze? Iâm curious to know what you think.
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