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(Reuters) — AMC Entertainment Holdings Inc. will face an April 27 hearing in a lawsuit claiming it circumvented shareholders who were against adding more shares, a Delaware chancery court judge ruled on Monday.
AMC common shares were up by as much as 28% on Monday afternoon, while preferred shares were down around 4%.
Vice Chancellor Morgan Zurn will hear from AMC investors who have accused the movie theater chain and several of its directors of violating state law by creating preferred shares in an attempt to “eviscerate” the voting power of common stockholders who had not supported issuing new shares.
Shareholders are scheduled to vote on March 14 over whether to convert preferred shares to common shares and authorize AMC to increase its common stock.
The common shareholders who sued the company on Feb. 20 agreed with the company that the vote can go forward but that AMC will not act to increase shares before the judge rules.
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., which shortsellers had bet against.
AMC last year created preferred shares, which trade on the New York Stock Exchange under the symbol “APE.”
A pension fund and two individual investors who have sued said in their proposed class actions that creating the preferred stock was an attempted end run around common shareholders.