Lionsgate’s facing a major distraction to its operations as Carl Icahn becomes the largest Lionsgate shareholder.

The billionaire has reached a 31% stake in the mini-major after blasting Lionsgate management repeatedly for mismanagement and overspending. Icahn lifted his holdings from 18.8% via a $7-a-share tender offer that expired Wednesday, setting the stage for a proxy fight for control of the Lionsgate board.

Analysts don’t expect Icahn to win that battle but admit he’s going to make life far more complicated for Lionsgate toppers in the coming months.

“It’s become a profoundly uncomfortable situation,” said analyst Matthew Harrigan of Wunderlich Securities. “I think there’s still a recognition that if the company continues to execute, there’s value there, but it’s such a Catch-22 for them. It’s difficult to manage constructively.”

Most notably, with Icahn’s stake above 20%, Lionsgate could default on its debt. But the mini-major is expected to be able to persuade its lenders, led by JPMorgan Chase, to grant it a waiver from those covenants by the end of the week.

Reps for Lionsgate declined to comment. Lionsgate shares closed down 6¢ to $6.93 on the New York Stock Exchange.

Icahn was able to boost his stake thanks to tenders from about 7% of shareholders along with Mark Cuban, who holds 5.3% and indicated last week that he’d tender his shares to Icahn. About 3.7% of shareholders had promised to tender shares before Icahn’s latest extension two weeks ago, so the revamped offer — no longer requiring 50% to go into effect — has attracted another 3%.

Other shareholders have until June 30 to tender their shares following official expiration of the offer.

If Icahn’s holding reaches 33%, he’ll have veto power over acquisitions. Attaining that level would also trigger “change in control” provisions that would award severance payouts to Lionsgate’s top execs.

But Harrigan indicated that he’s skeptical that Icahn’s stake will increase significantly. “The very large institutional holders have indicated that they’re going to continue siding with management,” he added.

Mark Rachesky, a former Icahn associate, supports Lionsgate management and owns just under 20%. Gordon Crawford of Capital Research Global Investors, which owns 10.5%, has also voiced support for management.

Icahn’s bid values Lionsgate, home to “Precious,” the Tyler Perry franchise, “Saw,” “Weeds” and “Mad Men,” at $825 million. Its management has repeatedly accused Icahn of making a lowball offer that overlooks improvements in its fiscal performance.

Icahn’s been calling for Lionsgate to hold its annual meeting, where board elections are held, as soon as possible. The event’s usually held in September in Toronto during the Toronto Film Festival.

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.

On Monday, Icahn pledged he would bail out of Lionsgate stock if he doesn’t win his proxy fight to take control of the board. He accused the board of supporting a management team not grounded in reality.

Icahn’s remarks came in response to Lionsgate’s lengthy letter to shareholders slamming the billionaire for his history of “value destruction and self-serving actions.”

The two sides had staged a similar battle PR battle last week, with Icahn warning that Lionsgate may have to file for bankruptcy due to possible credit defaults. Lionsgate fired back with the assertion that it is healthy and will be able to resolve its balance sheet issues.