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© Reuters. FILE PHOTO: An AMC theatre is pictured amid the coronavirus disease (COVID-19) pandemic in the Manhattan borough of New York City, New York, U.S., January 27, 2021. REUTERS/Carlo Allegri/File Photo
(Reuters) -Shares of AMC Entertainment (NYSE:AMC) Holdings Inc tumbled about 17% on Tuesday after shareholders voted in favor of converting the company's preferred stock into common shares.
Shareholders also approved a one-for-ten reverse share split.
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.
AMC listed the preferred shares trade under the symbol "APE" in a nod to Reddit's wallstreetbets stock trading forum, where participants often describe themselves as apes.
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 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 (NYSE:GME) which short sellers had bet against.
The common stock was down 17.3% at $4.52 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.
"The surest way to combat naysayers and profits of doom is to keep our cash reserves robust, manage our balance sheet smartly, and operate our company as well as we know how," Chief Executive Officer Adam Aron said following the vote.
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.
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