Studio issues $150 million debt offering
In revising its estimates for its fiscal year ending March 31, Lionsgate Entertainment said Monday part of the net losses it will report this month are due to $23 million it spent in the prevous year to defend itself against a takeover attempt from Carl Icahn.
Lionsgate also had losses of $43 million on its investment in pay cabler channel Epix, which eventually became profitable in Lionsgate’s fiscal year after a lucrative streaming distribution deal with Netflix. Executive stock compensation was $32 million for the year, higher because of change-of-control provisions that were triggered when Icahn’s equity stake in Lionsgate exceeded 33%. Those, too, contributed to net losses.
In a regulatory filing, Lionsgate said it expects revenues for the fiscal year to be between $1.5 billion and $1.6 billion and the net losses to between $66 million and $78 million. Revenues would have been higher by $125 million but Lionsgate has deconsolidated the TV Guide Network numbers. Its estimates are consistent with earlier guidance the mini-major gave the Street. In fiscal year 2010, revenues were $1.6 billion and the net loss was $19.5 million. Lionsgate will report its earnings on May 31.
In Monday’s filing, it did revise upward its guidance for earnings before interest, taxes, depreciation and amortization — commonly referred to as EBITDA — from $75 million to between $80 million and $100 million. Estimated free cash flow is expected to be between $1 million and $10 million, the company said, a turnaround from negative free cash flow last year of between $75 million and $85 million.
Icahn abandoned a proxy fight at Lionsgate in December in which he was attempting to put his own slate of directors on the board. He remains Lionsgate’s largest shareholder with a 33% stake but has not been agitating management in months.
Lionsgate also said Monday it is issuing $150 million in high-yield notes as part of a debt refinancing.