AMC Entertainment Holdings stock sank 33% in premarket trading due to concerns that an approved revised stockholder settlement will allow the deeply indebted cinema chain to issue more shares, diluting the value of existing shares.
The shares decreased to $3.48 before the bell, while the preferred stock units, known as "APE", surged 27.5%.
The settlement will see AMC offering stock estimated at $129 million to common shareholders, settling potential legal claims tied to a stock conversion strategy.
This decision follows a judge's rejection of a previous settlement version three weeks ago.
The approval enables AMC to proceed with its March plan, which involves converting preferred share units into common stock, executing a one-for-ten reverse share split, and potentially selling more shares to address its $5.1 billion debt.
Analysts predict AMC and APE shares will converge around $3 pre-conversion and $30 post-reverse split.