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Morning Blast: AMC Not Going Ape; X Marks the Spot

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Late Friday, Delaware Chancery Court Judge Morgan Zurn rejected a proposed settlement that would have ended a class action lawsuit brought by AMC Entertainment Holdings Inc. (NYSE: AMC) shareholders opposed to the company’s plan to convert its preferred units (NYSE: APE) into Class A common stock.

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The company had proposed a settlement that would have distributed an estimated $100 million to disgruntled shareholders. Judge Zurn was careful to limit the scope of her ruling:

The Court cannot address issues that do not pertain to the fairness of the settlement. Such issues raised by AMC stockholders include theories about synthetic shares, Wall Street corruption, dark pool trading, insider trading, and RICO violations, and a request for a share count.

In her ruling, Zurn said only that the settlement “cannot be approved as submitted” because it “purports to release not only claims associated with the common stock, but also claims associated with preferred interests that common stockholders might also hold.”

AMC issued AMC Preferred Equity units (APEs) to common stock owners last August. In March of this year, AMC shareholders and APE holders approved a 10-for-1 reverse stock split that would occur immediately after the conversion of APE units to common stock. This was a good deal for APE holders and not a good deal for owners of AMC common stock.

In premarket trading on Monday, AMC stock traded up by around 50% at $6.59, still miles short of its 52-week high of $27.5o. APE shares were up by about 1.1% early Monday at $1.82.

The AMC shares are jumping on the court decision. The APE units are probably reacting to the combined $235.5 million weekend box office of Barbenheimer. “Barbie” raked in $155 million and “Oppenheimer” took in $85.5 million, according to Variety. Barbie’s international take of $182 million pushed the movie’s total take to $337 million, more than double its reported budget of $145 million. Oppenheimer’s global weekend total came in at $174 million, well above its $100 million budget.

In the competition to see which overpaid executive will become the year’s worst, Twitter board chair and no-longer CEO Elon Musk may have pulled ahead of Warner Bros. Discovery CEO David Zaslav.

On Saturday, Musk encouraged his 149 million Twitter followers to propose a new logo to replace the social media’s blue bird of happiness. The new logo would become X Corp.’s new brand identity. X Corp. is the Musk company that owns Twitter, and Musk would select the new logo by Sunday. Done and dusted.

Newly minted Twitter CEO Linda Yaccarino is leading the cheering section.

Like Zaslav’s dropping of the HBO portion of the HBO Max streaming service, killing the blue bird and, presumably, eventually changing the social media’s name from Twitter to X is expected to be transformative. Somehow.

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