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AMC Entertainment Omissions on Theater Acquisitions Securities Class Action

AMC Entertainment Holdings, Inc. recently completed a series of acquisitions that make it the world’s largest chain of movie theaters, with theaters in the US, the UK, and Europe. The complaint for this class action alleges that AMC’s public filings contained omissions and misleading statements that violated both the 1933 Securities Act and the 1934 Exchange Act.

The class for this action is all purchasers of AMC Class A common shares in AMC’s secondary public offering (SPO) on or about February 8, 2017; and all purchasers of AMC’s common stock between December 20, 2016 and August 1, 2017.

Among AMC’s acquisitions were (1) Carmike Cinemas, announced in March 2017 and completed in December; (2) Odeon and UCI Cinema Holdings, in Europe, in November 2016; and (3) the Nordic Cinema Group that operates in Scandinavia and other northern European countries, in January 2017.

In late 2016, AMC filed a Form S-3, and later a prospectus, as a Registration Statement for the SPO. The S-3 allows companies to incorporate other filings by reference, such as previous 10-Qs for Carmike. At its SPO, AMC sold over 20 million shares.

However, the complaint claims that the Registration Statement contained omissions and inaccurate statements.

By the time of the SPO, the complaint alleges, AMC knew of issues with Carmike, for example, that after Carmike agreed to the merger, it had stopped making investments in its business, which caused it to lose customers; and that two or Carmike’s “biggest, most successful” theaters were closed for renovation for more than a year. These issues were not identified in the Registration Statement.

Also not included were problems with its European theater acquisitions. AMC’s second-largest source of revenue (after ticket sales) is food and beverage sales, but in Europe, its costs for food and beverages were about 50% higher than in the US. Also, European seasons for movie-going are different from American ones.

According to the complaint, these omissions were violations of the 1933 Act.

Also included in this 48-page complaint are allegations of violations of the 1934 Act in the company’s other public statements, such as on Form 10-Qs or conference calls, although their substance often overlaps with the 1933 Act violations. For example, the complaint claims that AMC did not reveal that the problems with Carmike theaters might not be resolved until the summer of 2018.

Also at issue in the complaint’s recital of 1934 Act allegations are the company’s statements about its handling of the large amount of debt it took on to finance its acquisitions.

The complaint claims that the omissions and misleading statements caused investors to buy the company’s stock at artificially inflated prices and that the shares lost value when the truth was revealed.

Article Type: Lawsuit
Topic: Securities

Most Recent Case Event

AMC Entertainment Omissions on Theater Acquisitions Securities Complaint

January 12, 2018

AMC Entertainment Holdings, Inc. recently completed a series of acquisitions that make it the world’s largest chain of movie theaters, with theaters in the US, the UK, and Europe. The complaint for this class action alleges that AMC’s public filings contained omissions and misleading statements that violated either the 1933 Securities Act or the 1934 Exchange Act. These included omissions about the declining state of one of its acquisitions, differences in business in the European theaters it acquired, and the handling of the debt required to finance the acquisitions.

amc_entertainment_sec_compl.pdf

Case Event History

AMC Entertainment Omissions on Theater Acquisitions Securities Complaint

January 12, 2018

AMC Entertainment Holdings, Inc. recently completed a series of acquisitions that make it the world’s largest chain of movie theaters, with theaters in the US, the UK, and Europe. The complaint for this class action alleges that AMC’s public filings contained omissions and misleading statements that violated either the 1933 Securities Act or the 1934 Exchange Act. These included omissions about the declining state of one of its acquisitions, differences in business in the European theaters it acquired, and the handling of the debt required to finance the acquisitions.

amc_entertainment_sec_compl.pdf
Tags: Entertainment, Providing False or Misleading Information, Securities, Stock Losses