AMC Entertainment Holdings Inc , the movie theater operator that became a 'meme stock' during the COVID-19 pandemic, has come up with an unusual way to win shareholder approval for stock sales that would raise cash, according to a regulatory filing and six corporate finance experts who reviewed it.
Holders of the preferred stock will be allowed to vote on the matter alongside holders of common stock. Since there are 1.8 preferred shares for every common share of AMC, preferred stock voting in favor of the conversion can easily outnumber common stock voting against the authorization for more common stock sales, according to six corporate finance professors interviewed by Reuters.
It was unclear how AMC shareholders will react on the bundling of the two issues into one vote, which is scheduled for March 14. AMC needs about 93 million new common shares to carry out the conversion of the preferred stock after giving effect to a proposed reverse stock split, but the filing shows it is seeking authorization to issue a total of 498.2 million common shares. That would give it 405.2 million common shares -- worth about $2.2 billion based on AMC's current stock price -- to issue after the conversion is completed.
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