A securities class action has been filed against AMC Entertainment Holdings, Inc. on behalf of all persons and entities who purchased or otherwise acquired AMC Preferred Equity Units (“APEs”) during the Class Period and were damaged thereby. Among the Class are those who held APEs immediately prior to the August 25, 2023 conversion and were thereby excluded from receiving the Special Dividend issued to common shareholders on August 28, 2023. The Class Period begins on August 18, 2022, the date of AMC’s false and misleading public assurances regarding economic equivalence, and ends on November 1, 2023, when the truth was first publicly revealed. This case has been filed in the USDC SDNY.
On August 18, 2022, AMC filed a Frequently Asked Questions (‘FAQ’) document with the U.S. Securities and Exchange Commission (‘SEC’) that made unqualified statements to investors that each APE was “designed to have the same economic value as a share of Class A Common Stock” and “designed to have the same voting rights as a share of common stock.” AMC further stated that, because of this design, “in theory, the common stock and AMC Preferred Equity unit should have similar market values and the impact of the AMC Preferred Equity unit dividend should be similar to a 2/1 stock split.”
The complaint alleges these statements were materially false and misleading because the rights of APE holders were in fact constrained by the Certificate of Designations (“COD”) for AMC’s preferred stock, which contained a highly-technical loophole allowing AMC to exclude APE holders from distributions occurring after conversion to common stock. This loophole was subtle, non-obvious, and undisclosed in the FAQ or other public investor communications.