Exhibit 99.1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT
OF NEW YORK
| DENNIS J. DONOGHUE, and |
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| MARK RUBENSTEIN, |
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| Plaintiffs, |
ECF CASE |
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| – v. – |
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| AMC ENTERTAINMENT HOLDINGS, INC., |
No. 23-cv-4985-JHR |
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| Nominal Defendant, |
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| – and – |
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| ANTARA CAPITAL MASTER FUND LP, |
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| ANTARA CAPITAL FUND GP LLC,
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| ANTARA CAPITAL LP, |
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| ANTARA CAPITAL GP LLC, and |
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| HIMANSHU GULATI, |
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| Defendants. |
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NOTICE OF PENDENCY OF DERIVATIVE ACTION
AND HEARING ON PROPOSED SETTLEMENT AND
MOTION FOR SETTLEMENT APPROVAL
| TO: | ALL PERSONS OR ENTITIES WHO OWN, DIRECTLY OR INDIRECTLY, ANY SECURITY OF AMC ENTERTAINMENT HOLDINGS, INC. |
PLEASE READ THIS NOTICE CAREFULLY
AND IN ITS ENTIRETY.
YOUR RIGHTS WILL BE AFFECTED BY PROCEEDINGS IN THIS ACTION.
This Notice is given by order of the United States
District Court for the Southern District of New York (the “Court”). The purpose of this Notice is to advise you of a
proposed settlement (the “Settlement”) of the action captioned above (the “Action”). The terms of the
Settlement are set forth in a Stipulation of Settlement dated September 11, 2023. A hearing will be held on the Settlement by the
Honorable Jennifer H. Rearden, United States District Judge, in Courtroom 12B of the Daniel Patrick Moynihan United States
Courthouse located at 500 Pearl Street, New York, New York at 1:15 p.m. on May 2, 2024 (the “Settlement Fairness
Hearing”). At the Settlement Fairness Hearing, the Court will consider, among other things, whether to approve the Settlement
as fair, reasonable, and adequate to AMC Entertainment Holdings, Inc. (“AMC”) and its stockholders. If the Court
approves the Settlement, the Action will be dismissed with prejudice, and AMC and all holders of AMC securities will be barred from
prosecuting the claims alleged in the Action.
THE ACTION
Nature of the Claims and Defenses
The Plaintiffs in the Action are stockholders
of AMC. They brought the Action derivatively on AMC’s behalf under Section 16(b) of the Securities Exchange Act of 1934, as amended
(the “Act”). Section 16(b) of the Act applies to, among other persons, every beneficial owner of more than 10% of any class
of an issuer’s registered equity securities (a “10% beneficial owner”). Under Section 16(b), the issuer is entitled
to recover from each 10% beneficial owner any profit the 10% beneficial owner realizes from any purchase and sale of the issuer’s
equity securities within any period of less than six months.
Plaintiffs’ First Amended Complaint was
filed on July 19, 2023. It asserts claims for recovery under Section 16(b) of the Act against Defendants Antara Capital Master Fund
LP, Antara Capital Fund GP LLC, Antara Capital LP, Antara Capital GP LLC, and Himanshu Gulati (collectively, the “Antara
Defendants”). The first four claims allege that the Antara Defendants realized a total of at least $28.75 million in profit
recoverable under Section 16(b) from transactions in AMC’s equity securities between December 22, 2022 and June 28, 2023. The
fifth claim seeks recovery under the alternative theory that the Antara Defendants did not become 10% beneficial owners of AMC until
February 7, 2023, when they closed a purchase of 106,595,106 AMC Preferred Equity Units (“APEs”) from AMC. Under the
alternative theory of the fifth claim, the Antara Defendants allegedly realized approximately $3.8 million in profit recoverable
under Section 16(b) from transactions in AMC’s equity securities between February 7, 2023 and June 28, 2023.
The Antara Defendants have not answered the
First Amended Complaint but have addressed its allegations in extensive communications with Plaintiffs’ counsel and AMC over
the course of several months. In those discussions, counsel to the Antara Defendants have asserted, among other things, that (1)
none of the Antara Defendants was at any time subject to Section 16(b) of the Act as a 10% beneficial owner of any class of
AMC’s registered equity securities; (2) even if certain of the Antara Defendants were 10% beneficial owners subject to Section
16(b) of the Act, they did not become 10% beneficial owners until the closing of the forward purchase of the APEs on February 7,
2023; and (3) Plaintiffs and AMC lack standing to pursue a Section 16(b) action against the Antara Defendants under Article III of
the U.S. Constitution. Based on these and other possible defenses, the Antara Defendants contend that AMC has no right to recovery
and deny each and every allegation of wrongdoing or liability raised in the First Amended Complaint.
Settlement Negotiations
AMC began investigating a potential claim
under Section 16(b) of the Act against the Antara Defendants in February 2023. The investigation was conducted with the assistance of
AMC’s outside counsel, who discussed the potential claim in communications with counsel to Plaintiffs and the Antara Defendants.
Counsel to AMC and the Plaintiffs also reviewed the Antara Defendants’ transactions in AMC’s equity securities and prepared
potential profit calculations under various scenarios and assumptions.
The terms of the Antara Defendants’
transactions in AMC’s equity securities were publicly disclosed in statements filed by the Antara Defendants with the SEC. The disclosure
included the dates, quantities, prices, and type of security involved in each transaction. Because the terms of these transactions were
publicly disclosed and not in dispute, AMC has not relied on discovery in evaluating Plaintiffs’ Section 16(b) claims against the
Antara Defendants. AMC’s evaluation focused instead on the legal questions raised by Plaintiffs’ claims. These questions included:
(1) when, if at all, the Antara Defendants became 10% beneficial owners of a registered class of AMC’s equity securities; (2) how
much profit the Antara Defendants realized from any transactions executed while they were 10% beneficial owners; and (3) whether AMC and
Plaintiffs have standing to pursue recovery of this profit in federal court.
AMC considered these questions with the
assistance of its in-house and outside counsel in consultation with Plaintiffs’ counsel and with input from counsel to the
Antara Defendants. If Plaintiffs were to prevail on all of their claims, AMC could be entitled to recover more than $28.75 million
from the Antara Defendants. If the Court found that the Antara Defendants did not become 10% beneficial owners of AMC until the
closing of the forward purchase of APEs on February 7, 2023, then AMC’s best possible recovery might be limited to
approximately $3.8 million. If the Antara Defendants were found not to have been 10% beneficial owners of AMC at any time, or if AMC
and Plaintiffs were found to lack standing to pursue recovery under Section 16(b), then AMC would likely recover nothing from the
Antara Defendants.
There is limited or conflicting law
on the questions discussed above, and AMC cannot predict with certainty which of the questions, if any, would be resolved in its
favor. There is also significant uncertainty about the proper method of profit calculation in Section 16(b) cases where, as here,
the defendant is alleged to have traded different classes of equity securities or a combination of equity securities and derivative
securities. There is also substantial legal authority and principles strongly suggesting that, at best, the Antara Defendants did
not become 10% beneficial owners of AMC securities until after the APEs purchase was cleared under the Hart-Scott-Rodino Act on
February 7, 2023. AMC considered these risks and uncertainties in negotiating the Settlement. It also considered the other risks and
uncertainties of litigation, including the out-of-pocket expenses of litigation, the dissipation of any eventual recovery through
the accrual of additional legal fees, the diversion of management’s time and energy, and unforeseen events that could bar or
limit recovery.
AMC and the Antara Defendants first entered into
settlement negotiations in May 2023. Negotiations continued after Plaintiffs filed their complaint on June 13, 2023 and after the First
Amended Complaint was filed on July 19, 2023. More than ten offers or counteroffers were exchanged before AMC and the Antara Defendants
reached an agreement in principle in August. Plaintiffs were informed of material developments in these negotiations and, after reviewing
the proposed terms of the agreement in principle, decided to enter into the Settlement with AMC and the Antara Defendants to resolve the
Action. The Settlement was memorialized in a Stipulation of Settlement dated September 11, 2023 (the “Stipulation”), which
all of the Parties have signed and which AMC filed with the Court on September 13, 2023.
Settlement Terms
If the Settlement is approved, the Antara Defendants
will be required to make a cash payment to AMC equal to $3,300,000.00. In exchange, the Action will be dismissed on the merits and with
prejudice and the Court will enter a final Order and Judgment which provides for a dismissal of the First Amended Complaint and a release
and bar order in the following form:
To the full
extent set forth in the Stipulation, each Antara Defendant and every other Antara Released Party (as defined in the Stipulation) is
hereby discharged and released from any and all liability and damages under or based upon any and all claims, rights, causes of
action, suits, matters, demands, transactions, circumstances and issues, known or unknown, absolute or contingent, accrued or not
accrued, liquidated or unliquidated, or otherwise, arising out of or relating to the subject matter of the First Amended Complaint
under Section 16(b) of the Act: (i) by Plaintiffs on behalf of themselves
or any other person or entity, (ii) by AMC, or (iii) by any and all owners of any security of AMC, whether individually, directly, representatively,
derivatively, or in any other capacity.
Plaintiffs, counsel
for Plaintiffs, AMC, and all owners of any security of AMC and their counsel, or any of them, either individually, directly, derivatively,
representatively, or in any other capacity, are permanently barred and enjoined from instituting or prosecuting this Action or any other
action, in this or any other court or tribunal of this or any other jurisdiction, arising out of or relating to the subject matter of
the First Amended Complaint under Section 16(b) of the Act: (i) by Plaintiffs on behalf of herself or any other person or entity, (ii)
by AMC, or (iii) by any and all owners of any security of AMC, whether individually, directly, representatively, derivatively, or in any
other capacity.
The above terms of the Settlement, if approved, will forever bar
AMC, Plaintiffs, and any other owner of any security of AMC from prosecuting the Action or any other action under Section 16(b) of
the Act relating to the subject matter of the First Amended Complaint.
Because the Action was brought derivatively on behalf
of AMC, the Antara Defendants’ payments under the Settlement will be made to AMC directly.
The Settlement is not and shall not
be construed or deemed as evidence or an admission of any fault or liability by the Antara Defendants, and the Antara Defendants do
not concede any merit to Plaintiffs’ theories or any infirmities in the Antara Defendants’ prospective defenses. If the
Court does not approve the Settlement, or if the Order approving the Settlement is reversed on appeal, then the rights and duties of
the Parties will revert to their respective statuses as of the date immediately prior to the execution of the Stipulation.
Attorneys’ Fees
Weil, Gotshal & Manges LLP has acted as outside
counsel to AMC in this matter. AMC also engaged James A. Hunter as Special Section 16(b) Litigation Counsel to advise it on the
negotiation of the Settlement and, if necessary, the prosecution of any Section 16(b) claims against the Antara Defendants. Mr.
Hunter’s agreement with AMC provides for a 22.5% contingency fee payable out of any funds actually received by AMC under the
Settlement. If the Settlement is approved and the payments required of the Antara Defendants are duly made in accordance with the
Stipulation, then a total of $742,500.00 will be payable to Mr. Hunter under this contingency fee arrangement.
Mr. Hunter has agreed under the terms of the Settlement
to divide his contingency fee evenly with the three firms representing Plaintiffs in the Action. These three firms are David Lopez, Attorney
at Law; Miriam Tauber PLLC; and Sterlington PLLC. Each of these three firms and Mr. Hunter is therefore expected to receive $185,625.00
from the proceeds of the Settlement if the Settlement is approved. AMC consented to the division of Mr. Hunter’s contingency fee
as described above in order to allow Mr. Hunter to perform an agreement he had entered into prior to the filing of this Action and prior
to his engagement by AMC. At that time, Mr. Hunter had represented an AMC stockholder asserting Section 16(b) claims similar to those
raised in the First Amended Complaint and had promised to divide evenly with Plaintiffs’ counsel any attorneys’ fees earned
by him in this matter.
Because Plaintiffs’ counsel will
be paid out of Mr. Hunter’s contingency fee as described above, the Settlement does not require AMC to make any separate payment
to Plaintiffs’ counsel, and no application for an award of attorneys’ fees will be made to the Court. The division of Mr.
Hunter’s contingency fee as described above is an obligation solely of Mr. Hunter. AMC has no liability to make any payment to Plaintiffs’
counsel or any other stockholder attorney in connection with the Action or the claims alleged in the First Amended Complaint.
THE SETTLEMENT FAIRNESS HEARING
A hearing will be held on the Settlement before
the Honorable Jennifer H. Rearden, United States District Judge for the Southern District of New York, at the United States Courthouse
located at 500 Pearl Street, New York, New York, at 1:15 p.m. on May 2, 2024 (or at such other time and place as the Court hereafter may
set, without further notice other than announcement thereof in open court at the above time and place). At the Settlement Fairness Hearing,
the Court will consider, among other things, whether the terms of the Settlement are fair, reasonable, adequate, and in the best interests
of AMC and its stockholders, and whether AMC and Plaintiffs have diligently prosecuted AMC’s putative Section 16(b) claim against
the Antara Defendants.
If you are the owner of an AMC security,
you may appear personally or by counsel and be heard at the Settlement Fairness Hearing, and you may support, object to, or otherwise
express your views regarding the Settlement. But you will not be heard and will not be entitled to contest approval of the Settlement
unless, on or before April 18, 2024, you file with the Court a notice of your intent to appear that (i) sets forth the type of AMC security
that you own, the amount of such security, and the date or dates on which you purchased it; (ii) states your support of, objections to,
or other views on the Settlement; and (iii) lists any witnesses you intend to call and any exhibits or other papers you intend to present
to the Court at the Settlement Fairness Hearing. On or before April 18, 2024, you must also serve, in person or by mail, a copy of your
notice of intent to appear, including the information described in clauses (i) through (iii) above, on each of the following persons:
| Joshua S. Amsel |
Douglas A. Rappaport |
| Weil, Gotshal & Manges LLP |
Akin Gump Strauss Hauer & Feld LLP |
| 767 Fifth Avenue |
One Bryant Park |
| New York, New York 10153 |
New York, New York 10036 |
| Counsel to AMC Entertainment |
Counsel for the Antara Defendants |
Holdings, Inc.
James A. Hunter
The Law Office of James A. Hunter
Four Tower Bridge
200 Barr Harbor Drive, Suite 400
West Conshohocken, PA 19428
Special Section 16(b) Litigation
Counsel to AMC Entertainment
Holdings, Inc.
FURTHER INFORMATION
This Notice only summarizes the terms of the
Settlement. For the complete terms of the Settlement, you should review the Stipulation, a copy of which has been filed with the
Court and posted on AMC’s Investor Relations site at https://investor.amctheatres.com. AMC has also filed a copy of the
Stipulation on a Form 8-K with the SEC. Copies of AMC’s filings with the SEC may be found on the SEC’s website at
http://www.sec.gov.
You may also wish to review other papers filed with the
Court in the Action. Copies of all papers filed with the Court in the Action may be inspected at the office of the Clerk of the
United States District Court for the Southern District of New York, 500 Pearl Street, New York, New York, during normal business
hours. Filings may also be downloaded from the Court’s Public Access to Court Electronic Records (PACER) system available
online at https://ecf.nysd.uscourts.gov/cgi-bin/ShowIndex.pl.
You may also obtain further information about the Action
or the Settlement by contacting AMC’s Special Section 16(b) Litigation Counsel during normal business hours as follows:
James A. Hunter
The Law Office of James A. Hunter Four Tower Bridge
200 Barr Harbor Drive, Suite 400
West Conshohocken, Pennsylvania 19428
Tel: +1 (484) 214-4697
E-Mail: hunter@hunterkmiec.com
PLEASE DO NOT CALL OR WRITE THE COURT
OR THE CLERK’S OFFICE OTHER THAN TO FILE NOTICES OF YOUR INTENT TO SUPPORT OR OPPOSE THE SETTLEMENT AND ACCOMPANYING DOCUMENTS.
| Dated: |
March 8, 2024
New York, New York |
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BY ORDER OF THE U.S. DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK |
