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Carl Icahn's tender offer for Lions Gate debt is a bust

May 5, 2009 | 11:39 am


It's fair to say that Carl Icahn has been snubbed by the bondholders of Lions Gate Entertainment. After recently extending his tender offer for the Santa Monica-based studio's outstanding debt, the activist shareholder not only received a tepid response, but investors also withdrew more than $8 million of the $8.8 million in bonds they had originally tendered back on April 20.

Of the $316 million worth of available bonds, Icahn wound up with just $583,000, according to a Securities and Exchange Commission filing made after the extended offer expired.

Lionsgatelogo Late last month, when he extended the offer by 10 days, Icahn chastised Lions Gate for making a last-minute deal with two of its bondholders to exchange $66.6 million of new debt for existing debt, pushing back the "put date" and lowering the strike price. Icahn said he believed that Lions Gate's refinancing exchange agreement "favors a select few bondholders at the expense of all shareholders and the other bondholders" and "may have confused some bondholders."

Icahn has been critical of Lions Gate management for what he views as the company's bloated overhead and its recent acquisition of the TV Guide cable channel. Lions Gate is in talks with several potential partners to sell up to 50% of TV Guide, for which the film and TV studio paid about $250 million.

Icahn had been threatening to launch a proxy contest, but so far that has not materialized. However, it's too early, and way too presumptuous, to think Icahn is ready to throw in the towel and go away completely, given his history. He still has time to put up a slate of directors before Lions Gate's annual shareholders meeting in September. Lions Gate has spent millions of dollars to fend off the corporate raider by hiring a team of high-powered law, public relations and proxy solicitation firms. The final act in the Icahn-Lions Gate drama has yet to be written.

-- Claudia Eller

Photo: Carl Icahn. Credit: Michael Nagle / Getty Images