Amping up his battle with Lionsgate, Carl Icahn has offered to buy as much as $325 million of the mini-major’s debt in what may be a prelude to a takeover offer.
Icahn, who holds 14.5% of Lionsgate, made the announcement Thursday but — in a move that left observers scratching their heads — declined to disclose the price he’s willing to pay. Lionsgate had no immediate response.
Icahn later told reporters that he’s not pushing for a sale of Lionsgate, but he was highly critical of its recent $250 million purchase of the TV Guide cable network.
Icahn said the offer is for all of Lionsgate’s $150 million convertible senior subordinated notes due in 2024 and for $175 million in notes due in 2025.
The bid, which would allow Icahn to gain more control of Lionsgate’s capital structure, is certain to create further discomfort for the company.
Icahn’s move came a day after the collapse of negotiations with Lionsgate over Icahn’s efforts to obtain seats on the 12-member board. Those discussions cratered over a “standstill” agreement that Lionsgate demanded as a condition of installing Icahn’s choices, including his 29-year-old son, Brett.
Lionsgate shares fell 27¢ to $4.69 Thursday on the New York Stock Exchange.
Icahn is the third-largest Lionsgate shareholder after Mark Rachesky, his former chief investment officer, and Steinberg Asset Management. Rachesky holds 19.4%, while Steinberg has a 14.9% stake; Capital Research has a 9.5% position.
Icahn disclosed in a Feb. 23 SEC filing that he could seek to add directors by expanding the current board or removing some members. Having board members would give Icahn better access to information about the mini-major.
The current board of the Vancouver-based company has 12 members, and eight of those seats must be filled by Canadian residents.
Lionsgate came under pressure from Icahn after reporting a $93.4 million quarterly loss on Feb. 9, when it announced that it plans to lower costs by making fewer movies. Since then, it’s scored solid box office from “My Bloody Valentine 3D” and “Tyler Perry’s Madea Goes to Jail.”
Icahn, who first became a shareholder in Lionsgate four years ago, has been pressuring the studio to cut costs, estimated at some $130 million annually. Lionsgate has eschewed high-cost features, opting instead for low- and mid-budget fare.
Analysts remain uncertain as to whether the company could fetch its full value in the current depressed environment. In addition to the “Saw” and Tyler Perry franchises, Lionsgate produces TV skeins “Mad Men” and “Weeds”; its library contains more than 8,000 films and 4,000 TV shows.