Icahn ups Lionsgate stake to 31.8%

Move likely to lead to bitter proxy fight

Carl Icahn’s made it official, announcing his stake in Lionsgate has risen to 31.8% through his tender offer — and portending a nasty proxy fight for control of the minimajor.

“We are pleased with the results of our tender offer,” Icahn said Thursday in a statement.

The activist investor’s stake had been at 18.8%. He disclosed that another 13.2% of shares worth $109.2 million had been tendered for his $7 a share offer — slightly more than the 12.5% figure he’d announced Wednesday, when the offer expired.

Lionsgate, which hasn’t yet set a date for its annual meeting to elect its board, said in response that Icahn won’t win the proxy fight.

“We remain confident that Carl Icahn will not obtain control of Lionsgate through its tender offer,” Lionsgate said in a statement.

Lionsgate stock was up a nickel to $6.98 in mid-session trading on the New York Stock Exchange.

Icahn can gain more shares for the next two weeks, as other shareholders will still be able to tender their shares to him up until June 30. He promised last week that he’d launch a proxy fight, blasting the board’s support for management and accusing Lionsgate of over-spending and failure to adjust to changing circumstances.

For its part, Lionsgate’s asserted that Icahn’s hostile bid is a lowball offer that ignores improvements in the minimajor’s performance. It’s also portrayed Icahn as an incompetent meddler who’s driven down the value of past investments.

“The vast majority of our shareholders have yet again demonstrated that they are serious about protecting the value of their investment in Lionsgate,” the company said Thursday.

If Icahn’s ownership stake reaches 33%, he will have the power to veto any mergers or acquisitions. That threshold would trigger a change-of-control clause in the employment contracts of top Lionsgate managers, who could opt to ankle with lucrative severance payments.

For now, Lionsgate is expected to obtain a waiver from lead lender JPMorgan Chase, since Icahn’s ownership of more than 20% could cause a default in its credit facilities and require it to make accelerated payments on its debt.

Lionsgate said Thursday it was in “advanced discussions” with its lenders on that issue and said it was confident that it will obtain a waiver.

Icahn asserted that Lionsgate had “made no mention of its plans to deal with possible defaults” and added that the directors “have only themselves to blame for the predicament in which Lionsgate now finds itself.”

Vancouver-based Lionsgate usually holds its annual shareholders meeting in September in Toronto during the Toronto Film Festival. Icahn’s suggested that the meeting be held as soon as possible.

Icahn’s bid values Lionsgate, home to “Precious,” the Tyler Perry franchise, “Saw,” “Weeds” and “Mad Men,” at $825 million. The two sides have been battling for more than a year, ever since Lionsgate refused to seat Icahn and his reps on the 12-member board.

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