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Top Lionsgate investor backs board

Mark Rachesky supports current management

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.

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