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Hoping Canadian court rules his way, Icahn extends Lions Gate tender offer to October

August 11, 2010 |  1:51 pm

Signaling that his attempt to take over Lions Gate Entertainment may be impossible unless he prevails in court, Carl Icahn has extended his tender offer for the film and television studio to Oct. 22.

The extension from a previous deadline of Aug. 25 is intended to allow the Supreme Court of British Columbia to rule in a lawsuit filed by Icahn, Lions Gate's largest shareholder. The suit aims to block a recent transaction in which Mark Rachesky, Lions Gate's second-largest stakeholder, bought $100 million of the company's debt and then converted it to stock.

The maneuver diluted Icahn's holdings to 32.9% from 38%. That makes it harder for the activist investor to seize control of Lions Gate, particularly with the threat of another similar transaction in the future.

The issuance of new stock violated a condition of Icahn's $6.50-per-share tender offer launched July 20, which the company's board recommended shareholders not accept. In a statement Wednesday, Icahn's investment firm said it nevertheless "intends to continue the offer in order to determine what relief is granted by the courts and regulators."

Icahn has filed lawsuits in British Columbia, where Lions Gate, headquartered in Santa Monica, is legally domiciled, and in New York in an attempt to reverse the transaction. The Canadian suit will be heard first.

If the courts do not rule in his favor, Icahn may abandon his tender offer.

He has also said he would run a slate of candidates to replace Lions Gate's board of directors at the company's next annual meeting. The Supreme Court of British Columbia has asked that the company not set a date of record -- the moment at which shares must be owned in order to vote -- for the annual meeting until after the October hearing. That means the meeting won't occur until November or December.

Lions Gate shares fell 23 cents, down 3.5%, to $6.37.

-- Ben Fritz

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