Amount is below face value but above market
NEW YORK — As Lionsgate girds for battle with Carl Icahn, the activist investor revealed on Tuesday the pricing of the tender offer he made last week to buy up to $325 million in company debt.
Icahn offered 75¢ on the dollar for certain notes and 73¢ on the dollar for others. That’s well below face value but a bit above recent market levels.
Bond holders will now consider whether to take Icahn up on the offer at this price. The timetable for that process remains unclear.
Meanwhile, Lionsgate has hired a seasoned team of advisers to help it fend off Icahn’s advances. Execs at the mini-major are incredulous about Icahn’s campaign and are starting to mount a more aggressive defense against his criticism of the company’s management.
Lionsgate has retained investment bank Morgan Stanley, law firm Wachtell, Lipton, Rosen and Katz and PR outfit Joele Frank, Wilkinson Brimmer Katcher because of their specific experience with Icahn. In recent years the billionaire has taken stakes and sought board or management changes at media and tech companies including Yahoo, Motorola, Blockbuster and Time Warner.
Many of the execs on the support team are veterans of other, non-media adventures with Icahn, including the takeover of TWA. “Their track record is excellent,” said a person with knowledge of the hiring. “Shareholders have a right to expect that the company is going to make a strong effort to defend itself.”
If Icahn proves successful with the debt purchase, it could boost his leverage substantially. In the past year he has increased his ownership stake in the company from 3.7% of the total shares to his current 14.5%.
The specifics of Icahn’s offer are as follows: 75¢ on the dollar for $150 million of 2.94% convertible senior subordinated notes due in 2024, and 73¢ on the dollar for $175 million of 3.63% convertible senior subordinated notes due in 2025.
Icahn’s intentions have not been spelled out in detail, but he has indicated distaste for the company’s January acquisition of the TV Guide Network as well as its insistence on standstill board provisions. The latter would have prevented Icahn from accumulating shares as long as his choices of board members were accommodated.
One board member Icahn had been advocating for selection was his son, Brett, a tech exec who also has worked at Icahn’s firm.
Wall Street seemed to like the news, sending Lionsgate shares up more than 8% to $5.31.