AMC: This is the [case] that doesn't end... (plus a Tesla settlement surprise)

It goes on and on, my friends. 🎶

I asked for help, here:

And I so received.

Let me make a correction and an addition to last night’s post, above.

First, the post suggested one possible alternative universe outcome would be that there could be a reverse split of common and not preferred, allowing the world to perhaps comport more with the FAQ from late 2022 when it answered the question “Are the AMC Preferred Equity units convertible into common stock? If so, when?” with the answer “[Yes, but w]e do not currently expect the AMC Board to make such a proposal any time soon. It is more likely than not that the two securities, the common stock and AMC Preferred Equity units will trade as two separate securities for quite some time to come.” Because as I said, I know time travels fast in the meme age, but late 2022 really was not that long ago. Maybe just giving common stockholders a minute to adjust to the reality of what hit them, of the necessity for the dilutive mechanism, maybe to just have it happen the way that they were told it was going to happen … idk, maybe that would make it more palatable. Just a thought.

But the mechanism by which I suggested that this happen was to effectuate a reverse split of common only and not preferred. However, it has now been pointed out to me that yes, the lawyers (collectively) really do think of everything, and the preferred here has an automagic conversion provision whereby — as they say — you ain’t going without me.

"If the Company effects a stock split, stock combination or other similar recapitalization of the Common Stock (in each case excluding an issuance solely pursuant to a reorganization event), then the conversion rate will be adjusted based on the following formula"

In plain language, it turns out that this means that if there were to be a reverse split of common, there would just also be a reverse split of preferred, like it or not. And the prior piece does not account for that eventuality. Because this means that with a reverse split of common there would automatically be enough headroom in common to allow for the automatic conversion right of preferred (because it would now automatically also be reverse split 10:1), and then the whole point of just reverse splitting common loses its meaning. I mean, as I said, without a settlement agreement or some sort of bulwark to prevent the conversion itself from happening, obviously it has the force of a thousand arbitrageurs behind it, so there’s a lot of pressure with its collective back against that wall, and it’s very likely to happen, but yeah.

There is an alternative way to parse the thing, wherein the “thing” is the “conversion and reverse split” — in this piece, I contemplated what it would look like to go with “reverse split” only but one could also imagine ditching the entire settlement package as it exists now, which is purportedly aiming to alleviate liquidity concerns, and just try to solve the problem a different way. Ok, you have liquidity concerns, fine. How about that share increase proposal that you have been wanting since the dawn of this great adventure? Isn’t that what the hokey pokey was always all about? We could put that back on the table? I get that this all ends up just seeming like a grand psychological adventure to get me comfortable with whatever end result that we will eventually wind up arriving at that probably looks something like the settlement on the table, but this is my blog, and that’s basically what it’s for, so congratulations on figuring that out, finally.

I mean, you could — especially by means of § 211 and if not by those means, then even perhaps by the new § 242(d) — certainly seem to achieve a share increase proposal with the reduced voting requirements now at hand. And that being said, the § 211 part is no longer some hypothetical thing being bandied about by randos on Twitter.

It’s a Very Real Thing™️ now, as of 9:12am this morning. The case has been filed, and you can read the complaint for yourselves here. My assumption is that it will be assigned to Vice Chancellor Zurn in short order. Of note is plaintiff’s prior proposal history that might shine some light into their plans for any meeting TBD on the calendar. And it ain’t looking like it’s going to be some alternative universe to the settlement proposed in the complaint. As one commentator on the prior post suggests, “I suspect this whole case is coming to a very quick end. Either VCZ greenlights the settlement, allows them to make minor changes with no notice, or the company says, sorry Mr. Barnes just forced us to hold our meeting so we will take a new vote factoring in the changes to 242(d) and we get conversion and shares to sell in any case.”

Also, in the meantime, my email is blowing up with news of a Tesla settlement:

It’s always something.

While I process all of this, I’ll let Lambchop, et al. sing you out.

Much love,

Chance

This is the song that doesn't end

Yes, it goes on and on my friend

Some people started singing it not knowing what it was

And they'll continue singing it forever just because...

(Music goes quicker.)

This is the song that doesn't end
(Oh no!)

Yes, it goes on and on my friend
(That's enough guys!)

Some people started singing it not knowing what it was

And they'll continue singing it forever just because...

This is the song that doesn't end
(I sing so beautiful I should sing solo /
I don't wanna hurt you all /
I don't wanna turn you off! /
how do I turn you off?)

Yes, it goes on and on my friend
(Ok, ok I get the joke!)

Some people started singing it not knowing what it was

And they'll continue singing it forever just because...
(I can't believe it fellows /
I can't believe you guys /
Ok come outside please /
I had it /
Ok that is....that is....that's it!)

This is the song that doesn't end

Yes, it goes on and on my friend
(What are you doing?)

Some people started singing it not knowing what it was
(Wha.... /
What is this? /
No stop that /
woah woah /
hey no no this no that this is the last time! /
right?
/this is it this is it!)

And they'll continue singing it forever just because...

This is the song that doesn't end

Yes, it goes on and on my friend

Some people started singing it not knowing what it was

And they'll continue singing it forever just because...
(You think this is funny?! /
Ok fellows if you keep on /
I like you to / go /
like to keep singing that song then move far far away go go go! /
no no no keep on going!)

(Lamb Chop, Charlie Horse, The Kids and Hush Puppy walks off and then the song fades.)

Shari Lewis: That's better!/whoop!

(Charlie Horse appears.)

Charlie Horse: This is the song that..... {(Doesn't Mmmmmmm)}

Shari Lewis: But Charlie Horse no no stop stop stop Charlie stop I want you to go away go away and don't slam the.... door!

(Charlie Horse disappears back into the house and then Shari Lewis turns to the audience, smiles and then the screen fades to black.)

Lamb Chop: (Off-Screen) Funding For Lamb Chops' playalong is provided by Corporation for Public Broadcasting and by the Viewers Like You. Thank You!

Man: (Off-Screen) This is PBS Kids!

Chorus: Ichabod and Mr Toad

Ichabod

Ichabod and Mr Toad

Ichabod, Ichabod and Mr Toad...

Friend Owl: Tweet-tweet! Tweet-tweet!

Tweet-tweet! Tweet-tweet! Love's sweet song.

[Brak & Zorak]:

This is the song that doesn't end

It just goes on and on my friend

Some people started singing it not knowing what it was

And they’ll just keep on singing it forever just because

This is the song that never ends (Ba-la-la-dee)

It just goes on and on my friend-

BRAK!

WHAT?

Stop singing that stupid song!

I can't stop it, it's the song that never ends!

Some people started singing not knowing what it was

And they’ll just keep on singing it-

AAARGH!

-forever just because

SHUT UP!

...Guess it just ended.