(Reuters) - AMC Entertainment (NYSE:AMC) Holdings Inc shares tumbled 24% in extended trade on Monday, while its preferred shares jumped 21% after the movie theater chain said it agreed to settle litigation and proceed with converting its preferred stock into common shares.
AMC said in a filing it had entered into a binding settlement with some investors and that it would ask a judge to lift a related status quo order, clearing its way to complete the stock conversion.
AMC investors suing the company accused it 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.
The preferred shares have lost over 70% since they were issued in August as part of a plan to pay down the company's debt.
AMC said that as part of the settlement, it has agreed to pay the plaintiffs one share for every 7.5 shares they own. In a separate press release, plaintiffs lawyers said they expected the shares paid to their clients to be worth over $100 million.
Shareholders voted last month in favor of increasing the total number of authorized shares and carrying out a one-for-10 reverse stock split as part of a plan to convert its preferred shares into common shares.
AMC listed the preferred shares under the symbol "APE" in a nod to Reddit's wallstreetbets stock trading forum, where participants often describe themselves as apes.
AMC became a "meme stock" during the COVID-19 pandemic, raising more than $2 billion in 2021 as retail investors piled into its stock and others such as GameStop Corp (NYSE:GME) which short sellers had bet against.