AMC Entertainment Holdings, Inc. (NYSE:AMC)
A class a class action lawsuit has been filed in United States District Court for the Southern District of New York on behalf of purchasers of AMC Entertainment Holdings, Inc. (“AMC”) (NYSE:AMC) Class A common shares during the period between December 20, 2016 and August 1, 2017, inclusive (the “Class Period”), including purchasers in the Company’s secondary public offering on or about February 8, 2017 (the “SPO”).
The complaint charges AMC, certain of its officers and directors and the underwriters of the SPO with violations of the Securities Exchange Act of 1934 and/or the Securities Act of 1933. AMC is principally involved in the theatrical exhibition business and owns, operates or has interests in theaters located in the United States and Europe. On December 21, 2016, AMC completed the acquisition of Carmike Cinemas, Inc. (“Carmike”) for $858.2 million. As of the acquisition date, Carmike operated 271 theaters and 2,923 screens located in 41 states across the United States. On November 30, 2016, AMC completed the acquisition of the outstanding equity of Odeon and UCI Cinemas Holdings Limited (“Odeon”) for $637 million. As of the acquisition date, Odeon operated 242 theaters with 2,243 screens throughout Europe.
On December 21, 2016, AMC filed a shelf Registration Statement with the SEC to permit the Company to offer and sell AMC common shares. On February 9, 2017, AMC filed the Prospectus for the SPO, which incorporated the Registration Statement. Pursuant to the Registration Statement and Prospectus, AMC sold 20.3 million common shares at $31.50 per share, raising nearly $640 million. The complaint alleges that the Registration Statement and Prospectus included materially inaccurate statements regarding the revenue growth of its newly acquired Carmike business and omitted material facts and included materially inaccurate statements associated with AMC’s newly acquired international business.
In addition, the complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse facts regarding AMC’s business and prospects. Specifically, the complaint alleges that defendants failed to disclose that Carmike’s operations had been experiencing a prolonged period of financial underperformance due to a protracted period of underinvestment in its theaters, that Carmike had experienced a significant loss in market share when its loyal patrons migrated to competitors that had renovated and upgraded their theaters, that AMC was able to retain only a very small number of Carmike’s loyalty program members after the Carmike acquisition, and that these issues were then having a material adverse effect on Carmike’s operations and theater attendance. As a result of defendants’ false statements and/or omissions, the price of AMC common shares was artificially inflated during the Class Period, trading above $35 per share.
On August 1, 2017, after the close of the market, AMC announced its preliminary second quarter 2017 financial results, disclosing that it expected to report total second quarter revenues of approximately $1.2 billion and a net loss in the range of $178.5 to $174.5 million, or a loss of $1.36 to $1.34 per diluted share. AMC also announced that its 2017 revenues were expected to be between $5.10 and $5.23 billion and its 2017 net loss to be between $150 and $125 million, or a loss of $1.17 to $0.97 per diluted share. In response to these much worse-than-expected results, the price of AMC common shares fell nearly 27% in one day to close at $15.20 per share on August 2, 2017, or more than 50% below the price at which the shares were sold in the SPO.
If you are a current shareholder and purchased stock between December 20, 2016 and August 1, 2017, and would like to discuss your options of exercising your rights as a shareholder, please contact us.
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