Stock Market

AMC’s Memorable Courtroom Drama: A Ruling That Rocked the Stock Market

Delaware Judge Rejects $129 Million Settlement, AMC Stock Soars

Published

9 months ago

July 22, 2023

The fate of cinema chain AMC Entertainment Holdings Inc. hung in the balance as a Delaware judge delivered a landmark ruling, sending shockwaves through the stock market.

Shares of AMC surged by a jaw-dropping 100 per cent in response to the decision that quashed a $129 million settlement, throwing the company’s financial future into uncertainty.

The legal battle centered around a settlement that would have allowed AMC to sell additional shares, providing a lifeline to weather the storm of pandemic-induced losses. However, Morgan Zurn, presiding over the Delaware Chancery Court, declared the deal unfair and unenforceable.

The proposed agreement aimed to pay off common stockholders while allowing preferred shareholders to convert their holdings into common stock. But, it lacked the necessary consent from the preferred shareholders, potentially closing the door on future legal claims against the company.

AMC’s tumultuous journey began during the COVID-19 pandemic, which dealt a severe blow to the cinema industry. In response, the company’s CEO seized on the phenomenon of “meme stocks,” aggressively selling shares to boost liquidity. As AMC continued to issue new shares, it needed approval from existing shareholders to authorize more equity. However, some investors expressed concerns about dilution, leading to a stalemate.

To raise capital, AMC introduced convertible preferred stock known as APEs in 2022. The company aimed to streamline its capital structure and reduce the discount at which APEs traded in the market by converting them into common shares. As part of its strategy, AMC sold APEs to a friendly hedge fund, Antara Capital, with an understanding that the hedge fund would support the authorization of more shares. But this move sparked opposition, as some shareholders argued that the deal infringed upon the rights of existing common shareholders who had previously rejected similar attempts.

Enter the legal tussle, with plaintiffs and the company eventually negotiating a settlement, offering common stockholders a substantial stock grant worth $129 million in return for dropping their objections to the preferred stock transaction. This agreement required court approval, but little did anyone anticipate the ruling that was to follow.

The courtroom drama escalated when a “special master” appointed by the court issued a report supporting the settlement. However, Judge Zurn disregarded the recommendation, citing the extraordinary and passionate nature of AMC’s stockholder base. With nearly 2,000 shareholders contacting the court during the litigation, the judge acknowledged the unprecedented involvement of retail investors with emotional connections to the company. The issues raised ranged from theories about synthetic shares and Wall Street corruption to dark pool trading and insider trading, indicating the fervent interest in the case.

The rejection of the settlement took many by surprise, including AMC itself, which did not provide an immediate response to the court ruling. Nonetheless, the stock market responded in a frenzy, with AMC’s shares skyrocketing by 100 per cent in after-hours trading, though later settling to a still-impressive 60 per cent increase. Meanwhile, APEs saw a decline of approximately 15 per cent.

As AMC’s shareholders navigate the aftermath of this momentous courtroom battle, the company’s future remains uncertain. The ruling serves as a reminder of the power wielded by passionate retail investors in the era of meme stocks and the profound impact they can have on the financial landscape. Only time will tell how AMC’s captivating saga continues to unfold.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigerian Exchange Limited

Nigerian Exchange Sees 0.05% Uptick After Bearish Streak: Investors Gain N26bn

Published

2 days ago

April 26, 2024

Samed Olukoya

After enduring a prolonged period of bearish trading, the Nigerian Exchange has finally witnessed a slight uptick, bringing a glimmer of hope to investors.

The modest increase of 0.05% in the All-Share Index signals a potential reversal of the recent downward trend with investors collectively gaining N26 billion in market value.

In recent days, the local bourse has been grappling with a bearish run, characterized by sell-offs and waning investor interest. Major indexes had faltered, dipping below milestones achieved earlier in the year.

However, Thursday’s trading session brought a much-needed reprieve as the market saw a marginal increase, instilling cautious optimism among market participants.

At the close of trading on Thursday, the All-Share Index edged up by 48 basis points, settling at 98,169.30 points.

Similarly, the market capitalization appreciated by 0.05%, reaching N55.52 trillion. While the increase may seem modest, it marks a significant shift from the downward trajectory that had persisted in previous sessions.

The market movers for the day included stocks of Zenith Bank Plc, Access Holdings, and Transcorp, which contributed to the gains observed.

Transcorp Hotels, Livestock, Tantalizer Plc, Sunu Assurance, and WAPIC led the pack with notable share price increases ranging from 6.15% to 9.75%.

Despite the overall uptrend, the exchange recorded more losers than gainers, reflecting subdued trading activity. Total deals, volume, and value experienced declines, indicating lingering caution among investors.

Sectoral performance was mixed, with the banking and consumer goods indexes witnessing declines, while the insurance index posted gains.

The announcement of corporate earnings and the proposed banking sector recapitalization exercise failed to significantly reignite interest in the market.

While these developments may have influenced investor sentiment to some extent, broader economic factors and global market conditions continue to shape investor behavior.

Zenith Bank emerged as the most traded security by volume and value, further underlining its significance in the market.

With 48.49 million units valued at N1.77 billion exchanged in 577 deals, Zenith Bank remains a key player in driving trading activity on the exchange.

As the market navigates through uncertainties and volatility, investors remain cautiously optimistic about future prospects.

While the recent uptick offers a glimmer of hope, market participants are keenly observing developments and adjusting their strategies accordingly, cognizant of the dynamic nature of the financial markets.

Nigerian Exchange Limited

Nigerian Exchange Continues Bearish Trend, Investors Lose N673bn

Published

3 days ago

April 25, 2024

Samed Olukoya

The Nigerian exchange closed another day in the red as market capitalisation dipped by N673 billion on Wednesday.

The persistent downward trend has left stakeholders grappling with uncertainty and heightened volatility in the financial markets.

During midweek trading, the All-Share Index (ASI) endured a decline of 1.20% or 1,190.24 index points to settle at 98,121.30 index points.

Similarly, the market capitalization of listed equities plummeted by 1.20% to N55.494 trillion, this downturn further reduced the year-to-date return to 31.22%.

The Nigerian exchange has been mired in a bearish sentiment for weeks, marked by successive declines attributed to sell-offs driven by prevailing market dynamics and shifts in fundamentals.

Factors such as a high-interest rate environment and improved yields in alternative investment avenues have contributed to the sustained downward pressure on the exchange.

Despite the overall negative sentiment, there were more gainers than decliners, with 22 stocks recording gains compared to 19 stocks in the red. This shift in market dynamics was reflected in trading activity levels, with total deals and value experiencing gains of 7.96% and 22.10%, respectively.

However, traded volume witnessed a notable decline of 31.10% to 395.75 million units.

Sectoral performance exhibited a mixed trend, with the Banking and Insurance sectors posting losses due to sell-offs in key stocks such as FBN Holdings, United Bank for Africa, AIICO, and others.

Conversely, the Consumer and Industrial Goods sectors recorded marginal gains driven by positive sentiment in select stocks.

Guaranty Trust Holding Company Plc emerged as the most traded security in terms of volume and value, followed closely by Zenith Bank Plc. However, key stocks such as MTN Nigeria, Transcorp Hotels, Oando Plc, and FBNH experienced significant declines, contributing to the overall market downturn.

Nigerian Exchange Limited

Nigerian Stocks Open Week with 0.17% Gain, Banking Sector Leads Market Rally

Published

4 days ago

April 23, 2024

Samed Olukoya

Nigerian Exchange Limited - Investors King

Nigerian stocks commenced the week on a positive note as the Exchange gained 0.17% in Monday’s trading session, with the banking sector spearheading the market rally.

The positive close pushed this year’s return to date to 33.34%, one of the highest in the world at the moment.

Analysts attributed the market’s positive momentum to increased investor interest in banking, insurance and industrial goods stocks.

This surge in buying activity follows recent widespread selloffs in the banking sector, presenting attractive opportunities for bargain hunters.

According to Vetiva Research analysts, the banking space witnessed significant bargain-hunting activity, indicating renewed confidence in the sector after previous weeks of sell-offs.

This sentiment propelled the overall market performance, with expectations of mixed trading sessions in the coming days as first-quarter earnings reports start to trickle in.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) and Market Capitalization reflected the market’s upward trajectory, appreciating from 99,539.75 points and N56.296 trillion respectively to 99,665.05 points and N56.367 trillion.

In total, investors exchanged 306,620,144 shares worth N5.300 billion in 8,298 deals.

Despite the positive market sentiment, analysts from Lagos-based United Capital Research cautioned that activities in the fixed income market could continue to deter equities investments.

However, they highlighted the potential for bargain-hunting activities, particularly in the banking sector, amidst the recent bearish trend.

Overall, the Nigerian equities market’s resilient performance underscores investor confidence and optimism, driven by strategic sectoral investments and expectations of improved corporate earnings.