Lionsgate Vice Chairman Michael Burns had to disappoint analysts who wanted him to open up about the big question of the day for his company: What’s going on with its reported merger talks with Summit Entertainment? “I’m not going to talk about any specific deal,” he said at the UBS Annual Global Media and Communications Conference. He noted, though, that a consolidation of independent film and TV companies is “a natural thing to happen.” He assured the group that Lionsgate is only interested in deals that add to its value, and don’t require it to either issue stock or take on additional debt. “We’re looking to delever, not lever up,” he says.
With that out of the way, he spoke candidly about the company’s plans for next year where he says “you’ll see us steady state for the first time” cranking out about a dozen movies and about three new TV shows. He’s encouraged about a plan to develop a TV series for ABC based on The Lincoln Lawyer – and Charlie Sheen’s Anger Management. ”I’ve known Charlie a long, long time,” Burns said. “Our goal is to keep Charlie working, keep him healthy — and we have a great partner in FX.” Burns says that a series it’s developing for Read More »
Every Icahn move has deep reverberations inside the film/television studio whose management is increasingly paranoid about how their actions will be viewed by him. What a destabilizing situation. Now Carl Icahn’s hostile takeover attempt intensifies with his $7.50 a share unsolicited tender offer this morning. It expires October 22nd. Icahn said his new offer will only be valid if the extra shares that the company recently issued to Lionsgate director Mark Rachesky (who used to be Icahn’s investment adviser) are rescinded or converted into nonvoting stock. The film/TV mini-major, in a defensive move against Icahn, did a debt-for-equity swap in July to dilute his stake in the company. It issued 16.2 million new common shares to Rachesky, boosting his stake to 28.9%, while diluting Icahn’s stake to 33.5% from 37.9%.
Icahn has asked the Supreme Court of British Columbia to reverse the swap. Lionsgate told me just now that its annual shareholders meeting, usually scheduled for sometime in September, has been postponed until after October 12th. “The British Columbia Supreme Court, which is hearing Icahn’s litigation, asked us to delay the record date for the Annual Shareholders Meeting until after their October 12 hearing,” a source told me.
Here is Lionsgate’s response to Icahn’s new tender offer:
SANTA MONICA, Calif. and VANCOUVER, August 31, 2010 — Lionsgate today announced that it has received a revised unsolicited tender offer from Carl Icahn and certain of his affiliated entities (the “Icahn Group”) to acquire up to all of Lionsgate’s
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The British Columbia Securities Commission dismissed Carl Icahn’s request for that cease trade order against Lionsgate. (Icahn Files Lawsuit Against Lionsgate Board.) The film/TV studio fending off his hostile takeover said it was “pleased”.
Ceasefire Ends; Lionsgate Ponders Icahn’s $6.50 A Share Bid
So now Carl Icahn owns only 33.5% of the film and TV studio, and not the 37.9% he had as of yesterday. Nasty, nasty, nasty. Though it is interesting to see these two camps whack at each other as Icahn tries for a hostile takeover. Here’s how Lionsgate described what it did today:
SANTA MONICA, Calif., and VANCOUVER, British Columbia, July 20, 2010 – Lions Gate Entertainment Corp. (NYSE: LGF) (the “Company”) announced that today it had completed a deleveraging transaction in which approximately $100 million of its senior subordinated notes were converted into common shares at an effective conversion price of $6.20 per share. The conversion price represented a 2.8% premium to Monday’s closing price of the Company’s common stock.
The transaction is a key part of the Company’s previously announced plan to reduce its total debt, as well as its nearer term maturities.
The transaction was effected by the Company’s wholly owned subsidiary Lions Gate Entertainment Inc. (“LGEI”) pursuant to the exchange of $36,009,000 in aggregate principal amount of its 3.625% Convertible Senior Subordinated Notes due 2025 and $63,709,000 in aggregate principal amount of 2.9375% Convertible Senior Subordinated Notes due 2024 in a private transaction. The notes were exchanged for new notes which were identical to the old notes but had an extended maturity date and extended put rights by two years and were immediately convertible at an initial
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BREAKING NEWS! … UPDATE: Today, Lionsgate Entertainment filed Form 8-K paperwork with the SEC that it has entered into a “Material Definitive Agreement” with Carl Icahn agreeing ”to work together on certain acquisition opportunities beginning on July 9, 2010 and ending on July 19, 2010″. Icahn has been leading a hostile takeover of the movie/TV studio and now owns 37.9% of Lionsgate which he’d like to buy for his son Brett to run. But Lionsgate is moving to cap Icahn’s shares at 38%. So today’s ceasefire announcement was surprising. However, Lionsgate insiders tell us that this is, at best, a temporary halt to the long battle for the studio. Lionsgate recently stepped up merger talks with MGM. Here is the letter just filed with the SEC:
Mr. Carl C. Icahn
Each of Lions Gate Entertainment Corp. and its subsidiaries (“Lions Gate”) and Carl C. Icahn and his affiliates (“Icahn”) hereby agree that, beginning today and ending at midnight, New York City time, on July 19, 2010 (the “End Date”), Icahn and Lions Gate will work together on certain acquisition
Lions Gate hereby agrees that, beginning today and ending on the End Date, it will not: (i) issue, agree to issue, or authorize or propose the issuance of, any securities to, or enter into any agreement, contract or understanding outside the ordinary course of business with, any member of its board of
directors or their affiliates; (ii) engage in active negotiations for
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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.
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Carl Icahn came out swinging again today, and Lionsgate hit back. Icahn released a statement answering the question of why he offered $7 per share when the stock dropped to $4.85 several months ago. Icahn said that the only positives that served to enhance the share value since the stock dropped to $4.85 was his tender offer, and the fact Lionsgate joined the Russell 2000 Index, both of which are short-term gains. Icahn charged that library value has “declined precipitously,” and that adjusted earnings before EBITDA was only $82 million. “I cannot help but wonder who will purchase stock when my tender offer expires on Wednesday,” Icahn wrote. He said there is long term potential for a rebound for Lionsgate in TV and as a distributor–not producer-of feature films, and if the company cleans up its balance sheet by halting the production of big budget films and trying to acquire another film library.
Not surprisingly, Lionsgate–which previously chronicled the drop in share value of other companies Icahn acquired–said Icahn’s statements about its 2010 earnings (EBITDA) “is simply the latest in a series of factual inaccuracies, errors and misleading statements. While Icahn pegged the number at $82 million, Lionsgate reported it as $128 million. The company also said it posted record revenues in library income ($323 million) and TV ($351 million), and that overhead was down 8% from last year, at $112 million. “Continued misstatements and inaccuracies shouldn’t distract our shareholders from the simple truth that our financial performance is strong, our … Read More »
EXCLUSIVE: Reliable sources tells me that Lionsgate vice chairman Michael Burns flew to NYC on Wednesday night to have dinner with Carl Icahn “to see if they could work together and avert a hostile takeover of the studio”. This is a very big deal because in recent months and weeks the two men have been sparring very publicly on CNBC. Or Icahn and Lionsgate management have been sending nasty letters to shareholders and even nastier news releases to the media about each other. I understand that Burns explained why Lionsgate is having merger talks with MGM. That may be the reason why Carl was not completely dismissive of the idea Friday – but not why he still slammed management for distracting from the studio’s problems. Remember, a proxy fight like the one Icahn has pledged to wage is a very expensive proposition. And now that Lionsgate stock has joined the Russell 2000 index and jumped past Carl’s $7-a-share tender offer, Icahn may have to offer at least $7.50 to control more than 32% of the studio. Thus making his hostile takeover still more pricey.
Another day, another brawl between Lionsgate and its biggest shareholder Carl Icahn as he attempts a hostile takeover of the studio. Today, he gave an interview to Dow Jones newswire saying he wouldn’t rule out supporting a merger between Lionsgate and MGM but slamming the benefit to shareholders of a deal between them. ”I’ve found in my investment career that it’s very difficult but not impossible to cure one problem you have by taking on a second problem,” said Icahn, noting that film libraries are under pressure due to uncertainty about the future of the DVD sales business, which is in decline. ”This is analogous to a couple that is having a lot of problems paying the mortgage on a relatively small house,” Icahn added. “Instead of focusing on taking care of those problems, they’re out negotiating to buy a big mansion down the street that’s rumored to be haunted.” On another front, Icahn says Lionsgate shares are now “artificially overvalued” as the stock price rose to $7.27 today, well above his tender offer of $7 a share, because the studio was being added to the Russell 2000 index at the close of trading. Liosngate insiders insist the the studio’s June 1st reporting of its better-than-expected performance (70% higher than its initial guidance) is the reason for the higher stock price.