Stock down to $6.36, the lowest since mid-April

Shares of Lionsgate have taken a 4% hit after an analyst lowered his rating on the stock on concerns about the impact of a possible merger with MGM.

The stock was down 25¢ to $6.36 in trading Thursday on the New York Stock Exchange — Lionsgate’s lowest closing price since mid-April.

Lionsgate execs presented a merger plan earlier this week in a meeting with MGM debtholders. That prompted Caris & Co. analyst David Miller to lower his rating to “average” from “above average,” citing the possibility that Lionsgate was “empire building” at the expense of its balance sheet.

Miller said a merger could be a “hyper-complicated, off-balance sheet arrangement which could undermine investor confidence.” He also reduced his price target on the shares to $7 from $8.50.

MGM received a sixth extension Wednesday on debt payments from its 140 creditors, who have given the beleaguered studio a forebearance that will expire Sept. 15.

Neither MGM nor Lionsgate commented on the merger plan but it’s believed that Lionsgate wants the surviving entity to retain the MGM name and be headed by Lionsgate toppers Jon Feltheimer and Michael Burns.

Lionsgate is in the midst of a 10-day truce in its battle with its largest shareholder, Carl Icahn, who owns nearly 38% of the minimajor.

MGM has also met with execs from Spyglass and Summit in recent weeks to discuss scenarios under which MGM would reorganize and receive production funds.

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