Not long ago, a private equity firm shorted garbage stocks, but since retail investors speculated on junk stocks, “the more smelly, the more fragrant,” they had to cut their positions out of tears.

Yesterday, American retail investors won yet another victory. The US stock of AMC, a well-known retail group stock, once soared 93% after the market, but now the increase has declined somewhat. The latest report was 7.17 US dollars/share.

According to the news, AMC's previous application to convert APE preferred shares into common shares was rejected by a judge in Delaware. The plan would cause retail holdings to be diluted, and these retail investors have helped AMC theaters get out of the brink of bankruptcy.This progress is seen as a huge and unexpected win for retail investors.

Looking back, in 2021, at the height of the epidemic, American retail investors raised AMC's stock price to a maximum of 45.01 US dollars/share, thus saving this troubled cinema chain.

As the number of new common shares available for sale in 2021 was about to run out, AMC sought shareholders' authorization to issue more shares, but failed to obtain sufficient shareholder support.

Last year, AMC began issuing APE preferred shares, but there are fewer restrictions on the number of sales. The company paid a special dividend of one unit of APE to each common share holder, then began issuing and directly selling additional APE preferred shares of 30% to hedge fund Antalya Capital through the marketplace. So far, AMC's total number of APE preferred stock units is close to 1 billion, common stockApproximately 517 million shares.

Subsequently, AMC introduced a proposal to convert APE preferred shares into common shares and a 10-to-1 reverse stock split. Shareholders approved the plan in March of this year.

Since the trading price of APE has always been lower than that of common stocks, AMC's preferred stock is currently priced at 1.8 US dollars/share, far lower than the closing price of common stock yesterday at 4.4 US dollars/share, so APE preferred stock holders are motivated to vote for the conversion.

However, the proposal was also opposed by some shareholders.Opposing shareholders argued that APE preferred shares to common shares and gave them equal voting rights was tantamount to manipulating shareholders' votes.

Shareholders are still dissatisfied with one of the “mirror voting” clauses.In that provision, although not all holders voted, the percentage of those who voted for the proposal applied to the entire shareholder group.

Of the common shareholders who voted on the APE conversion plan in March, about 70% voted in favor, but the number of people who participated in the voting was relatively small.otherMany retail investors either opposed the proposal or simply did not vote on it.

As a result,A group of shareholders led by pension funds and retail shareholders took AMC to court, accusing it of implementing illegal enterprise engineering plans and crowding out the investor base.

The judge in charge of the ruling said,The proposal wouldn't have passed if it weren't for the mirrored voting clause, plus the fact that Antalya Capital promised to vote yes, and AMC manipulated the voting results. Accordingly, the proposal was rejected.

Additionally, AMC told investors that the company was draining cash at an unsustainable rate and warned that failure to raise capital could force the company to go bankrupt; selling more shares would enable it to pay off $5.1 billion in debt.

But until the lawsuit is settled, it will not be able to carry out such plans.

Following this rejection, the dispute will be sent back to both parties, who may decide to revise the proposed solution and try to approve it again.