Studio to privately refinance $66.6 mil of its debt
In a move that may put a damper on any takeover effort by Carl Icahn, Lionsgate is refinancing $66.6 million of its debt in a private deal.Meanwhile, Icahn had not indicated Monday afternoon whether he would extend his offer to buy $350 million of the Lionsgate debt or allow it to expire. In a Securities and Exchange Commission filing Monday, the mini-major disclosed that it had renegotiated with noteholders to exchange $66.6 million in existing notes due in 2025 for a new issue of the same bonds with two annual interest payments. The new notes have a lower conversion rate — $8.25 a share, compared with $14.28 — and mature three years later in 2015. Lionsgate vice chairman Michael Burns told Daily Variety, “It’s a private transaction with two of our major bondholders on terms that are attractive to both sides.” The filing also said the debtholders have agreed not to sell any of their 2024 notes to Icahn via the “existing tender offer,” which limits support for Icahn among Lionsgate’s shareholders. Icahn’s 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. He launched the tender offer for the debt on March 12, a day after talks collapsed on his obtaining seats on the mini-major’s board. The billionaire has insisted he’s not pushing for a sale of Lionsgate, but he’s remained highly critical of the recent $250 million purchase of the TV Guide cable network. Lionsgate has not commented on Icahn’s offer beyond announcing last month that it was neutral and that its board had “strongly urged” debtholders to consider several risk factors before agreeing to sell to Icahn. Icahn owns 14.5% of the stock and is the third-largest shareholder. Mark Rachesky, a former Icahn associate who supports management, increased his holding last month to just short of 20%, while Steinberg Asset Management has a 14.9% stake and Capital Research has a 9.5% position. Lionsgate shares fell 13%, or 70¢, to $4.66 on Monday on the New York Stock Exchange amid widespread losses to most issues. Lionsgate came under pressure from Icahn after reporting a $93.4 million quarterly loss on Feb. 9. Since then, it’s scored solid box office from “Tyler Perry’s Madea Goes to Jail” and “The Haunting in Connecticut” while its “Crank: High Voltage” fell short of expectations last weekend. Icahn, who first became a shareholder in Lionsgate four years ago, has been pressuring the studio to cut costs. The mini-major’s costs are estimated at some $120 million annually after two rounds of job cuts, including 45 slots last month. Lionsgate has eschewed high-cost features, opting instead for low- and mid-budget fare. 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.
Want Entertainment News First? Sign up for Variety Alerts and Newsletters!