Company Town

The business behind the show

« Previous Post | Company Town Home | Next Post »

Lions Gate files to raise up to $750 million

February 17, 2010 |  3:51 pm

Lions Gate Entertainment, signaling that it may be gearing up for a major acquisition or another strategic move, on Wednesday filed a registration with the Securities and Exchange Commission to raise up to $750 million.

The filing comes as Lions Gate is in the midst of bidding for struggling Metro-Goldwyn-Mayer Inc. Lions Gate is one of a half-dozen companies that are in a second round of bidding to buy MGM. The non-binding offers submitted so far range between $1.4 billion and $1.8 billion, estimate people close to the situation.

In addition, Lions Gate is mulling an offer for Walt Disney Studios' specialty film division Miramax Films. Last year, Lions Gate also was in merger talks with Summit Entertainment, the independent studio behind the lucrative "Twilight" movie franchise.

The filing comes just a day after shareholder Carl Icahn voiced concern about Lions Gate making a major acquisition such as MGM or Miramax without shareholder approval. Icahn's declaration came as he announced his intention to make a tender offer to raise his stake in the studio to just under 30% from 18.9%.

It appears unlikely that Lions Gate's filing is a direct response to Icahn's surprise move, however, given that it fits into the studio's ongoing strategy of diversifying its business through acquisitions.

In its filing, Lions Gate did not specify how it may use the potential proceeds, indicating that possibilities include  debt repayment, working capital, and acquisitions.

The so-called "shelf registration" does not obligate Lions Gate to raise any money at all. It is a signal to the market, however, that it could raise what would be a substantial amount of money for the independent studio, which has a market capitalization of $640 million.

-- Ben Fritz and Claudia Eller