People who follow box office results closely won’t be surprised, but Lionsgate made it official today: Conan the Barbarian, Warrior and Abduction were such stiffs that the company says in an SEC filing it expects to announce that it lost somewhere between $40M-$50M in cash flow for the current quarter. Lionsgate made the unusual forecast in a prospectus to sell 19.2M shares, which stems from its agreement to help billionaire Carl Icahn unload most of his holdings in the company. The arrangement ended Icahn’s effort to take control. Vice Chairman Michael Burns is meeting with investors who might want to buy the shares. Lionsgate stock was unchanged in mid-day trading.
The billionaire shareholder activist isn’t buying a lot — but it’s enough to keep company watchers wondering whether he might challenge Lionsgate’s management at the September 13th investor meeting in Toronto. He bought 53,963 shares this week at about $7 a share, raising his stake slightly to 33.2%, he says in an SEC filing. The latest purchases follow the 702,877 shares he bought last week, his first purchase of the studio’s stock since July 2010. It’s unclear whether he’ll be able to cast votes with his new holdings. Lionsgate set August 5th as the record date — purchases after then typically can’t be voted. But Canadian law allows for some exceptions. Still, Icahn could offer other candidates for the board at any point up to the meeting. Icahn, who has criticized Lionsgate’s spending and strategy, nominated five board candidates last year. All lost. Lionsgate said last week that it is running the same 12-director slate that was elected last year.
Billionaire Carl Icahn bought 702,877 shares of Lionsgate this week, raising his stake in the movie and TV studio about 0.5% to 33.1%, he says in an SEC filing today. What appears to be his first purchase of the studio’s stock since July 2010 likely will lead company watchers to wonder whether he plans to make another move to take control — possibly at Lionsgate’s shareholders’ meeting in Toronto on Sept. 13. Icahn’s filing says nothing about his plans, just that he bought the stock in a range of $6.74-$6.90 a share. Lionsgate closed Friday at $7. But the timing is curious: The additional shares give him a bit more power if he wants to put directors he favors on the Lionsgate board. Icahn has said that the company’s been mismanaged and spends too much. He could offer other candidates for the board at any point up to the meeting. Last year, Icahn had five nominees, all of whom lost. Lionsgate said on Friday that it is running the same 12-director slate that was elected last year.
Not surprisingly, Lionsgate is trumpeting the fact that Carl Icahn has been dealt another court loss. The New York State Supreme Court just ruled against Icahn’s injunction to unwind Lionsgate’s July 20th deleveraging manuever that had the effect of diluting Icahn’s stake in Lionsgate from around 37% to around 32.8% and increasing studio board member Marc Rachesky’s stake from around 19% to around 29%. Icahn also lost his attempt to stop Rachesky from voting his shares in the Lionsgate vs Icahn proxy fight with the showdown set for the shareholders meeting on December 14th. Said the court: “It seems to me that the essence of a fight for control of a public company is which faction can win the hearts and proxies of the shareholders. Although the percentage of shares owned by a faction is a starting point to win this battle, persuasion is the ultimate vehicle for success.”
The Carl Icahn vs Lionsgate proxy war heated up overnight. That’s because two major proxy advisory firms counseled shareholders to support the entire or majority of Icahn’s dissident slate of directors for the embattled TV/film studio. A Lionsgate insider acknowledged to me that the recommendations were a “mixed bag” for the company. But Icahn trumpeted the news in advance of the December 14th shareholders meeting in Los Angeles.
The proxy advisory firm Egan-Jones, which provides independent voting recommendations, stated: “We feel that is imperative that the Dissidents be heavily represented on the Board … and that voting the dissidents’ ballot is in the best interest of the Company and its shareholders.” Icahn, naturally, was pleased. “The actions of Lionsgate’s Board speak for themselves as does the company’s and its stock’s performance,” he said in a statement.
Another major shareholder advisory firm Institutional Shareholder Services recommended to shareholders they approve 3 of Icahn’s five nominated board members: film executive Jay Firestone, lawyer Daniel A. Ninivaggi, and former Bertelsmann entertainment executive Michael Dornemann. However, ISS nixed ex-Overture boss Chris McGurk and former Princeton president Harold Shapiro.
Icahn himself issued a statement saying he was pleased by the recommendations, noting: “$100 invested in Lions Gate stock five years ago would be worth $56 today. If you had put that same $100 into an NYSE composite index, it would have been worth $117. If you had put it in my hedge fund, it would be worth $145. If you put it under your mattress, you at least would …
Lionsgate has sued its biggest shareholder Carl Icahn, claiming he publicly opposed a merger between the company and MGM then gummed up the process until he could profit substantially from a potential marriage. Lionsgate claims Icahn publicly said he would oppose the merger, only to turn around and secretly buy up a large stake in MGM’s debt…and then push for the merger. ”It turns out that Icahn was misleading Lionsgate and its shareholders all along,” the lawsuit, filed in New York, says. And that “recent developments indicate he was playing a double game. Icahn opposed a merger not because it was bad for Lionsgate but because it was good – so good in fact that he wanted to postpone it until he could buy up as much of both companies as he could.” The suit also says that, “While urging Lionsgate shareholders to support his takeover campaign to ensure that Lionsgate did not pursue what he called a ‘delusional’ MGM transaction, Icahn was quietly amassing a huge position in MGM debt with the undisclosed intention of reaping profits from both sides in an eventual merger.” All of this comes one day before the voting deadline on a proposed prepackaged bankruptcy plan that would see Spyglass Entertainment’s Gary Barber and Roger Birnbaum take over the studio. Just this week, Icahn redoubled his efforts to buy up even more MGM debt in preparation for a Lionsgate merger, so the big unknown is how any …
Carl Icahn has made another offer to MGM lenders in hopes of thwarting the prepackaged bankruptcy plan and Spyglass deal. He’s now offered to buy $1.6 billion in debt at a premium price of 53 cents on the dollar; last week, he offered to buy $963 million in debt. The offer expires Friday — the voting deadline for the bankruptcy/Spyglass plan that would put Gary Barber and Roger Birnbaum in charge. On Monday, Lionsgate sent a letter to MGM proposing that a Lionsgate-MGM merger, which Icahn now supports, could save about $100 million annually and increase revenues. If Icahn indeed manages to buy up the $1.6 billion, the total amount he would own would give him a majority of the debt. The Spyglass plan would give lenders 95% ownership of the company; a Lionsgate merger would give creditors a 55% equity stake.
Calling the proposed Spyglass plan a “presciption for disaster,” Carl Icahn on Thursday offered to buy another $963 million of MGM’s debt. He already owns around $500 million of it, so the sum would make him one of MGM’s largest creditors – with a stake of around 37%. Pending the offer, he would then be in a good position to approve a merger between Lionsgate and the studio, one he now supports. Some of MGM’s creditors are pushing hard for that prepackaged bankruptcy plan that would instead see Spyglass’ Gary Barber and Roger Birnbaum come in and run the studio. As a condition of his offer, Icahn said anyone selling to him must vote against the Spyglass plan; a vote is scheduled for Oct. 29. Icahn also stated on Thursday: “This is the critical decision point for MGM lenders, yet we are being rushed into an extraordinary Prepackaged Plan with limited information and input, on a “hurry up basis” that frustrates any dissent. I hope to defeat this “rush to judgment.”
No surprise. Lionsgate announced today its Board of Directors who were present voted unanimously reject Carl Icahn’s $6.50 a share tender offer for all outstanding common stock in the film/TV studio.
Another nasty day in the Carl Icahn vs Lionsgate battle. This time, Icahn has made good on his threat to go to court to overturn the film/TV studio’s recent “scorched earth tactic” that diluted his stock holdings He’s referring to last week’s debt-for-equity swap involving major shareholders Mark Rachesky and John Kornitzer. The lawsuit was filed today in the New York State Supreme Court against Lionsgate, its board of directors, Rachesky, Kornitzer Capital Management and its principal John Kornitzer. Icahn wants an injunction to reverse the deal that bought and converted $100 million in senior notes to reduce Icahn’s stake in Lionsgate from 37.3% to 33.5%. “If allowed to stand, this scheme will insulate the directors and management from having to face a fair election at the upcoming annual meeting of Lionsgate’s shareholders,” Icahn said.
He also filed a Canadian petition in the Supreme Court of British Columbia about the manuever on Friday, while the British Columbia Securities Commission has scheduled a hearing about it on July 28th.
It was Lionsgate’s lastest attempt to thwart his hostile takeover of the mini-major and give it to his son Brett to run. Still pending is Icahn’s latest $6.50 a share tender offer for outstanding shares of the company, and his promise to wage a proxy fight over control of Lionsgate’s board at the September annual meeting.
UPDATED: What came out of the 10-day cease fire between Carl Icahn and Lionsgate management? An offer by Icahn to buy the company for $6.50 a share. Considering that Icahn acquired over 30% of the company by offering $7 per share — Lionsgate management called that sum inadequate and urged shareholders to reject it — it seems unlikely this will lead to a deal.
Icahn’s firm said today there were no immediate opportunities that justified extending the “standstill period,” though it said discussions about a potential acquisition may continue in the future. Icahn’s side also reiterated that it intends to replace all or most of Lionsgate’s board of directors. The firm said recent actions taken by the company, like its adoption of a second poison pill measure after a previous one was struck down by Canadian regulators, convinced the firm that “it is extremely unlikely that the current management and board of directors of Lionsgate will allow shareholders of Lionsgate to make their own determination on the future path of the company, including decisions to make a major acquisition.”
Here’s the release just issued by Lionsgate and Icahn’s statement:
SANTA MONICA, CA, and VANCOUVER, BC, July 20, 2010 — Lionsgate today announced that it has received an unsolicited tender offer from Carl Icahn to acquire up to all of the common shares of Lionsgate for US$6.50 per share in cash. The offer is scheduled to expire at 8:00 p.m., New York City time, on August 25, 2010, unless extended or
Welcome to the real-life game of Survivor: Wall Street. Lionsgate management tonight is trying to outwit, outplay, and outlast Carl Icahn before he effects a hostile takeover of the movie/TV studio for his son Brett. Lionsgate tonight announced it’s putting into place a “Shareholder Rights Plan” — i.e. a poison pill defense — to cap Icahn at 38% of its stock (he is currently at 37.9%) so he can’t do a “creeping bid” through open market purchases like he did today or private market transactions. ”If he wants control of the Company, he should make a bid that is fair to all shareholders along the lines of a permitted bid described in the press release below,” a studio insider tells me.
Today, Icahn’s stake rose to 37.9%, or 44.8M shares, of Lionsgate. With 12+% more stock, he can become its majority stockholder. And then Lionsgate’s 12-member board, and the studio’s management team of Jon Feltheimer and Michael Burns, all have a target on their backs. Icahn’s $7 a share tender offer expired at midnight Wednesday, and left him with a 33.9% stake in Lionsgate. (Icahn Now Owns 33.9% Of Lionsgate) Today, he acquired an additional 4% more of the company by buying on the open market. Lionsgate’s immediate reaction was effectively to enact a poison pill defense. But it enacted a poison pill months ago — to prevent Icahn from accumulating over 20% of Lionsgate stock through his tender offer — and Canadian regulators nixed that measure. Can that happen again?
Here is tonight’s Lionsgate statement:
SANTA MONICA, Calif., and VANCOUVER, British Columbia, July 1, 2010 — Lionsgate (the “Company”) today announced that its Board of Directors has adopted a Shareholder Rights Plan that is designed to encourage the fair and equal treatment of Lionsgate’s shareholders in connection with any initiative to acquire effective control of the Company.