11:04 AM EDT, 09/04/2024 (MT Newswires) -- An AMC Entertainment Holdings ( AMC ) shareholder has asked the US Supreme Court to hear her case alleging that the company's leadership rigged a vote to overcome common stockholders' objections to a stock conversion they argued would significantly weaken their market capitalization positions.

The dispute revolves around the company's desire to issue more shares in early 2021 after it ran out of issuable shares, despite the objections of retail shareholders, according to the petition. While AMC was out of common stock, it was allowed to issue "blank check" preferred stock under its charter.

AMC announced in July 2022 a special equity dividend of one preferred equity unit for each share of class A common stock. The new equity, called AMC Preferred Equity units, or APEs, held the same voting power as the common shares. However, in practice, the APEs had significantly more voting power since the voting agent was required to vote all units in proportion to the instructions received, according to the petition.

AMC's board approved two amendments to its certificate of incorporation in December 2022 that required stockholder approval: an increase in the authorized number of shares of common stock and a 1-for-10 reverse stock split. Once approved, the APE units would convert to common stock, but because APE units were trading at a steep discount to AMC common stock, the upshot of the conversion would be to transfer a large amount of AMC's market capitalization to APE units from common stockholders, according to the petition.

"To ensure the vote on the Proposals would pass, AMC's Board approved a sale of $110 million APEs to Antara Capital LP," the petition said. "Critically, AMC secured Antara's advance approval of the Proposals, meaning that AMC's leadership rigged the vote."

The petition to the Supreme Court was filed in response to a May 22 ruling by the Delaware Supreme Court affirming the decision of the Court of Chancery of the State of Delaware.

AMC did not immediately reply to a request for comment from MT Newswires.

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