With Lionsgate prepping for battle with Carl Icahn, the company’s largest shareholder has declared he supports the current management of the mini-major.
In a recent regulatory filing with the Securities and Exchange Commission, Mark Rachesky, who holds 19.99% of Lionsgate stock, also said he may seek a seat on the 12-member board.
Lionsgate and Icahn had no immediate comment.
News of the move emerged Wednesday, a day after Icahn — who holds 14.5% — revealed his pricing for his offer to buy up to $325 million of Lionsgate debt while Lionsgate hired a team of advisers to defend against Icahn’s criticism of Lionsgate management.
The 13D filing by Rachesky’s MHR Affiliated Funds — required because Rachesky has shifted its investment from “passive” to a more active status — said MHR was “principally supportive” of management and has discussed obtaining a board seat. (Because Lionsgate is based in Vancouver, Canadian residents must occupy at least eight of the 12 board seats.)
Rachesky’s a former associate of Icahn, having worked with him as a strategist during the 1990s. The filing disclosed Rachesky has upped his stake to just under 20% — a threshold that could trigger change of control provisions under the company’s $340 million credit line.
Shares of Lionsgate edged up 4¢ Wednesday to $5.35 on the New York Stock Exchange.
Icahn has advocated that Lionsgate reduce its annual expenses, currently at about $130 million. In the wake of last week’s breakdown of talks over Icahn obtaining board seats, Icahn also blasted management for using its $340 million revolving loan for the recent $255 million purchase of TV Guide Network and TV Guide Online.
Icahn has declared he’s not pushing for a sale. He also noted last week that the loan could default due to a change in control of the board, a shareholder acquiring more than 20% of the stock or the removal of named executives.
He first invested in the stock four years ago and began raising his stake from 3.7% last year. The stock came under pressure after Lionsgate reported a third-quarter loss of $93.4 million last month, prompting the mini-major to cut its annual slate to 12 pics.