Shareholders for AMC Entertainment have settled a lawsuit to convert the company’s preferred equity APE units into shares of common stock.

Following the news, shares for the movie-theater operator slipped 24% pre-market, while the company’s preferred shares jumped 21%.

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In a filing with the Securities and Exchange Commission on Monday, the world's largest movie theater chain said it had entered a binding settlement with investors and would ask a Delaware Chancellery Court judge to lift a related status quo order, clearing the way to complete the stock conversion, while also allowing a 10-to-1 reverse stock split to raise capital.

AMC investors accused the company and several of its directors of violating a law by creating the preferred shares to "eviscerate" the voting power of common stockholders who had not supported issuing new shares.

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The preferred shares have lost over 70% since they were issued in August as part of a plan to pay down the company's debt.

AMC said that, as part of the settlement, it has agreed to pay the plaintiffs one share for every 7.5 shares they own. In a separate press release, plaintiffs’ lawyers said they expected the shares paid to their clients to be worth over $100 million.

The reverse stock split, the conversion and the settlement payment are subject to court approval, which has not been given. AMC will provide an update with respect to the expected timetable for these events as additional information becomes available.

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Shareholders voted last month in favor of increasing the total number of authorized shares and carrying out a 10-for-1 reverse stock split as part of a plan to convert its preferred shares into common shares.

Reuters contributed to this report.