Shares of AMC Entertainment Holdings Inc. (AMC-N) tumbled about 17% on Tuesday after shareholders voted in favor of converting the company’s preferred stock into common shares.
Shareholders also approved a reverse share split at a 10:1 ratio.
The approval of the measures at Tuesday’s shareholder meeting comes as AMC faces an April 27 hearing in a lawsuit claiming it circumvented shareholders who were against adding more shares.
The preferred shares, which trade under the symbol “APE,” have lost over 70% since they were issued in August as part of a plan to pay down the company’s debt.
The common stock was down 17.3% at $4.51 following the vote, putting it on track for its worst day in almost two years. The preferred shares were up 6.9% at $1.85.
AMC investors suing the company have accused the movie theater chain and several of its directors of violating a law by creating the preferred shares in an attempt to “eviscerate” the voting power of common stockholders who had not supported issuing new shares.
AMC became a “meme stock” during the COVID-19 pandemic, raising more than $2 billion in 2021 as retail investors piled in to its stock and others such as GameStop Corp which short sellers had bet against.
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