According to the law firm press release, 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 May 30, 2018, the Court issued an Order consolidating cases and appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended Complaint on August 13. On August 15, Lead Plaintiff filed an amended Complaint to correct a deficiency in the August 13 Complaint. On November 21, Lead Plaintiff filed a second amended Complaint. Lead Plaintiff re-filed the second amended Complaint on November 26. On January 22, 2019, Defendants filed a Motion to Dismiss the second amended Complaint. The Court issued an Order granting in part and denying in part Defendants' Motion to Dismiss on September 23.