Icahn Set to Own 31.8 Percent of Lionsgate

NEW YORK: Carl Icahn announced this morning that 13.2 percent of Lionsgate’s outstanding common shares have been tendered to him for $7 each, bringing his stake in the company to 31.8 percent.

By the time the offer ended last night at 8 p.m., 15,593,104 common shares had been tendered. The aggregate cash consideration to be paid is approximately $109.2 million.

A subsequent offering period has commenced and will expire June 30. During this time, Lionsgate stockholders can still tender shares, for $7 each.

Icahn said in a statement: "We are pleased with the results of our tender offer. We note Lionsgate’s repeated warnings that our purchase of shares tendered in the offer would cause an ‘event of default’ under the company’s credit facilities, which could trigger ‘cross-defaults’ with respect to over $472 million of bond indebtedness. Lionsgate also stated again on Monday that it was ‘confident’ in its ability to obtain a waiver under its credit facilities in order to prevent such an event of default. However, we are concerned that since that time we have seen no communication regarding this waiver. Additionally, Lionsgate has made no mention of its plans to deal with possible defaults under its bond indebtedness (which would not be cured through a waiver under its credit facilities) in the event we obtain control of the company. As we have stated before, we believe the directors have only themselves to blame for the predicament in which Lions Gate now finds itself, as they were the ones who agreed to the offensive "poison put" provisions in the company’s debt documents (which we consider to be entrenchment devices)."

Lionsgate, meanwhile, issued its own statement this morning noting that shareholders of 68 percent of common stock rejected Icahn’s offer. “The vast majority of our shareholders have yet again demonstrated that they are serious about protecting the value of their investment in Lionsgate,” the statement said.

The studio says it is in advanced discussions with lenders regarding a waiver or amendment that would prevent a default that would be triggered by increases in Icahn’s ownership stake. “Based on conversations to date, Lionsgate is highly confident that it will obtain that waiver or amendment shortly."

The Lionsgate statement also reiterated that the company is on track to deliver “exceptional value” to shareholders. “The strength of our library continues to grow, our home-entertainment business remains strong, our TV business has one of the highest success rates in the industry from pilot to full series pickup, we have the beginnings of a tremendous channel platform, we’ve built a diversified portfolio of businesses and our feature films continue to be the main driver. The conclusion is simple and clear: our plan is working, our business is on track and we expect to continue to build our world-class media platform.

“Conversely, Carl Icahn has no coherent strategy for the company,” the statement continues. “His failures at Blockbuster and his former film distribution company, Stratosphere, show that he does not understand the media space. He is looking to seize control of Lionsgate with a financially inadequate, coercive and opportunistic bid. Do not transfer the value of your investment in Lionsgate’s future to Carl Icahn."

Lionsgate says it is confident that Icahn will not obtain control of the company in the subsequent tender offer.