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.
Dr. Yemi Cardoso’s Nomination Boosts Confidence as Stock Investors Gained N264 Billion
The bullish momentum in the Nigerian Exchange Limited continued on Tuesday as investors pocketed N264 billion in profit following Monday’s gains of N263 billion.
Both the market capitalization and the All-Share Index, which gauge the movement of share prices for all listed companies surged by 0.71 percent to N37.413 trillion and 68,359.22 points, respectively.
This optimistic trading trend emerges as investors increasingly show confidence in the local market and the broader economy, fueled in part by the news of Dr. Yemi Cardoso’s nomination as the Governor of the Central Bank of Nigeria.
As Tuesday’s session drew to a close, the volume of shares traded experienced a significant uptick of 31.33 percent to 676.74 million. However, the number of deals declined by 8.35 percent to 7,659 while the total trade value decreased by 33.97 percent to N5.89 billion.
Market sentiments also leaned towards the bullish side, with 36 gainers outpacing the 27 losers.
Among the top-performing stocks that caught the attention of investors were:
- Berger Paints Plc, which surged by 9.95 percent to conclude the trading day at N11.60.
- Oando Plc, which recently released its audited results for 2021, saw a 9.92 percent increase, closing at N13.30.
- BUA Foods, which gained 6.32 percent to close at N196.70.
- PZ’s shares appreciated by 1.45 percent per unit, ending at N20.
- GTCO Plc stock increased in value by 0.43 percent, closing at N35.40.
On the flip side, the top losers included:
- SCOA Plc, witnessing a 10 percent depreciation in its shares, closing at N1.24.
- Unilever’s shares recorded an 8.28 percent drop, concluding at N13.30.
- United Bank for Africa Plc, which lost 1.96 percent in share value, closing at N17.50.
- FBN Holdings Plc, suffering a 1.69 percent decline, closing at N17.40.
- Accesscorp’s shares depreciated by 0.29 percent, closing trading at N17.40.
The Nigerian Exchange continues to display its resilience and attractiveness to investors, making it an exciting space to watch for potential opportunities and market trends.
Nigerian Stock Market Sheds N409 Billion Last Week
Investors in the Nigerian stock market lost N409 billion last week after weeks of bullish run following President Bola Ahmed Tinubu’s economic restructuring.
During the week, investors traded 2.933 billion shares worth N47.449 billion in 44,654 deals against a total of 2.644 billion shares valued at N45.450 billion that exchanged hands in 44,189 deals in the previous week.
The Financial Services Industry led the activity chart with 1.955 billion shares valued at N26.384 billion that were traded in 21,707 deals. Therefore, contributing 66.67% and 55.61% to the total equity turnover volume and value, respectively.
The Oil and Gas Industry followed with 281.356 million shares worth N5.307 billion that exchanged hands in 4,423 deals. In third place was the Conglomerates Industry, with a turnover of 280.586 million shares worth N1.763 billion in 3,079 deals.
United Bank for Africa Plc, Transnational Corporation Plc and Access Holdings Plc were the three most traded equities in the week. The three accounted for 1.026 billion shares worth N13.649 billion that were transacted in 9,733 deals and contributed 34.98% and 28.77% to the total equity turnover volume and value respectively.
The NGX All-Share Index declined by 1.10% to close the week at 67,395.74 index points from 68,143.34 index points reported in the previous week while market capitalization depreciated by the same 1.10% or N409 billion to close the week at N36.886 trillion.
Similarly, all other indices finished lower with the exception of NGX Insurance, NGX MERI Growth and NGX Growth which appreciated by 0.46%, 0.55% and 4.15% respectively while the NGX ASeM index closed flat.
Thirty-two equities appreciated in price during the week lower than fifty-two equities in the previous week. Fifty-three equities depreciated in price higher than thirty-five in the previous week, while seventy equities remained unchanged, higher than sixtyeight recorded in the previous week.
SEC Aims for 50 Shari’ah-Compliant Listings Worth N5 Trillion by 2025
The Securities and Exchange Commission (SEC) reaffirmed its commitment to achieving a target of 50 listings of Shari’ah-compliant products, with a combined market capitalization estimated at around N5 trillion by 2025.
Mr. Lamido Yuguda, the Director-General of SEC, represented by Mr. Dayo Obisan, the Executive Commissioner of Operations, made this announcement during a capacity-building workshop for local Shariah talent within the non-interest capital market – level II.
The event, held in Abuja, was organized in line with the non-interest capital market (NICM) segment of the revised Capital Market Masterplan (2021 – 2025), which aims to introduce 100 retail Shariah-compliant products and attract over one million direct investors in Shariah-compliant products.
Yuguda explained that in the face of these ambitious targets, the commission is resolved to intensify its developmental efforts, particularly in capacity building.
This initiative aims to nurture competent professionals who can leverage Shariah best practices to facilitate the effective implementation of Shariah-compliant initiatives, ultimately fostering the growth of the NICM sector.
The Director-General noted that the commission would continue to utilize its subsidiary, the Nigerian Capital Market Institute, to develop robust programs related to Non-Interest Finance. These programs are expected to promote capacity-building and enhance the adoption of Shariah-compliant products and processes.
Yuguda highlighted the fundamental distinction between conventional finance and Non-Interest Finance, emphasizing the application of Shariah principles in the latter. He stated, “NICM cannot exist without experts in Islamic commercial jurisprudence (Fiqhul Mu’amalat Al-Maliyya).”
“The objective of this Workshop, therefore, is fast-tracking the development of experts for the Market,” he continued. “We believe this will enhance the development of our local Sharia talent, not only for the Nigerian Capital Market but also for the Nigerian Financial system in general.”
Yuguda underscored the growing interest in NICM products among various investor classes in Nigeria, citing the oversubscription of the FGN and corporate Sukuk issued in previous years as evidence.
He noted that the Level 2 segment of the workshop, which commenced with extensive discussions on Shariah Contracts, is aimed at consolidating participants’ understanding of both theoretical and practical aspects of NICM.
“Armed with this training and subsequent ones to come, the participants would undoubtedly have the potential to provide Shariah advisory services for the Islamic Finance Industry, particularly the Non-Interest Capital Market’s operations as it relates to Shariah principles and rulings,” he added.
Yuguda also highlighted the significant progress made in this area, with Nigerian Islamic Finance ranking 13th on the Global Islamic Finance Development Indicator 2022, surpassing countries like Bangladesh and Turkey.
He concluded by emphasizing the gradual growth of the Non-Interest Finance Sector, which has evolved into a distinct industry within the broader financial landscape. This sector offers viable alternatives to traditional interest-based financial systems.
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