Hey, I just wanted to pass along to you folks the information I have on the securities lawsuit going on in the Southern District of New York and sort of combat some of the misinformation that is going around. Since I have a PACER account I was able to get ahold of the full complaint with exhibits and if reading isn’t your style I did a video on the subject on my YouTube channel.
The biggest thing I wanted to get out right from the start is this case is chiefly not against AMC. There are a lot of people going around making this sound like AMC is the subject of this complaint and it is not. Antara is the subject of the complaint. AMC is simply added as what is called a nominal defendant. They have a technical connection to the matter and are needed to complete the litigation, but they have no liability in the case. They are here because the original Antara deal was in AMC’s preferred stock and because if the plaintiff’s succeed AMC would be given the disgorgement of Antara’s profit related to this securities action.
The biggest things to note about this case is that more than likely plaintiff’s will not succeed on Count 1, they may succeed on some parts of Count 2, they will likely succeed on Count 3, and we really wont know anything about Count 4 unless or until the plaintiff’s get discovery.
Count 2 is about the options Antara bought and then sold in relation to the arbitrage trade. The puts were 100% likely to be losses but the other options doubtfully were not. So the $16 million being claimed by plaintiff’s isn’t the likely recovery there, but it is also likely that it won’t be a zero.
Count 3 is about options that Antara wrote and potentially held to expiry for a profit. Those likely in full will be a slam dunk. That is only about $3 million according to the plaintiffs in their complaint. Though they also say it might be higher. They wont know till they get discovery.
Count 4 is on the total return swaps. The plaintiffs make no claims of recovery here and simply reserve the right to make claims. They have no idea as to the contract specified for the total return swap, so they wont know till discovery if they have a cause of action.
That is the lawsuit in short. Hope that was informative for everyone.