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Lionsgate nominates Rachesky, who vows to support managment, to board

July 9, 2009 |  9:07 am

Lionsgate, as expected, has nominated its largest shareholder, Mark H. Rachesky, to its 12-member board as a defensive measure against activist investor Carl Icahn, who has threatened to wage a proxy war against the movie and television studio. Rachesky, a former associate of Icahn’s, would replace board member Mark Amin.

Unlike Icahn, Rachesky, whose New York based MHR Fund Management LLC owns 19.8% of the company’s common stock, has been a strong supporter of Lionsgate management. Icahn, on the other hand, has been highly critical of the studio’s executives team. Icahn is Lionsgate’s second largest shareholder with holdings of about 17%.

The billionaire investor, who has been steadily increasing his stake in Lionsgate over the past year, had been in talks earlier this year about gaining several board seats. But those discussions fell apart over issues that included management’s refusal to give him assurances that a standstill agreement would also be applied to other shareholders seeking board seats. This past March, Rachesky changed his investor status to “active” from “passive” and said in a regulatory filing that he may seek a board seat.

Now that Rachesky has been nominated, it would seem likely that Icahn would move swiftly to put up his own slate of directors before Lionsgate’s annual shareholders meeting in September. Lionsgate said it will announce the remainder of its board slate in the coming weeks.

Rachesky had worked as a chief investment strategist for Icahn from 1990 to 1996 before leaving to form his own investment firm. According to Rachesky’s bio on Loral Space & Communications, a satellite company on which he serves as a non-executive chairman, MHR specializes in “distressed and deeply undervalued middle-market companies.” Rachesky has been a major shareholder in Lionsgate for more than five years.

In a prepared statement, the press-shy Rachesky said, "I look forward to joining the Lionsgate Board of Directors and assisting management in its mission to continue building shareholder value.”

He also said that MHR will support management's slate of Board of Directors nominees at the upcoming annual shareholders meeting.

"Dr. Rachesky is an investor who shares our vision for continued growth and diversification," said Lionsgate co-Chairman and Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns. "He brings a strong independent voice to our board as well as leadership in the wireless and digital media space that will be invaluable to our continuing evolution as a next generation studio."

-- Claudia Eller