AMC Entertainment Can Breathe Easier As Judge Approves Revised Shareholder Settlement; Means Theater Chain Could Raise Fresh Cash

deadline.com:

CEO Adam Aron has expounded on Twitter and most recently on AMC Entertainment’s latest earnings call about the risk of a cash crunch and even bankruptcy if it wasn’t able to secure financing in a still uncertain box office climate.

Today he can breathe easier as a Delaware Chancery Court Judge approved a revised shareholder settlement that paves the way for that to happen.

Chancellor Morgan Zurn, in her second opinion, approved the agreement she had rejected on July 21 for being “unsound.” The problem speaks to the fact that AMC has an unusual investor base of millions of individual shareholders who were reluctant to dilute their holdings by allowing the company raise equity capital, with its regular shares.

So AMC created new APE units (AMC Preferred Equity) as a workaround, figuring it could sell those, but it didn’t work. The APEs, which were traded separately, plunged in value.