By Scott Kanowsky
Investing.com -- The spread between common and preferred shares in AMC Entertainment (NYSE:AMC) (NYSE:APE) widened in early U.S. trading on Thursday after a court decided against lifting an order that the movie theater chain had petitioned to have lifted to speed up the conversion of its shares.
Earlier this week, AMC announced that it had entered into a binding settlement term sheet with shareholders who had sued the company over its decision to issue preferred shares last August.
The group said it would also ask a Delaware court to remove a status quo order. AMC needed this action in order to both turn the preferred stock into common shares and carry out a planned reverse stock split before the court formally approved the settlement.
However, Delaware Chancery Court judge Morgan Zurn ruled that no party had presented "good cause" to lift the order.
Following the ruling, common shares in AMC surged by more than 13%, preferred APE shares slipped by just under 10%. "APE" is a reference to the retail investors on the Reddit forum wallstreetbets who, under the moniker "Apes," helped fuel a surge in the shares during the 2021 meme-stock boom.
Last month, investors voted in favor of carrying out a one-for-ten reverse stock split and converting APE shares into common equity. The move was widely expected to allow AMC to raise funds and pay off debt through stock sales and an increase in its total share base.