Lionsgate board neutral on Icahn

Debt holders asked to consider risk factors

Lionsgate’s board of directors decided Thursday to express no opinion and remain neutral in regard to Carl Icahn’s tender offer for the company’s debt.

Nevertheless, a statement said the board “strongly urged” debt holders to consider several risk factors before agreeing to sell to Icahn. The billionaire’s offer expires April 20.

The risks, according to the board, include the fact that a sale could double Icahn’s current equity stake to about 29%, putting the company’s credit facility at risk of default. That could be accompanied by an acceleration of other outstanding debt.

The board also said there could be greater value for debt holders for certain notes beginning in 2011 and 2012 compared with the Icahn offer.

Icahn, the statement noted, has not made an offer to buy common shares in Lionsgate, only debt. While the debt position could be converted into an equity stake, the conversion is not a fait accompli.

Lionsgate shares shed 2% Thursday to close at $5.41.

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