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Carl Icahn extends tender offer for Lions Gate as MGM creditors weigh options

October 22, 2010 |  1:05 pm

Lions Gate Entertainment's largest shareholder, Carl Icahn, has extended his $7.50-per-share tender offer to buy all of the film and television studio's outstanding stock to Nov. 1 as he awaits some key decisions.

The activist investor wanted to push back the deadline of his tender, which was originally set to expire Friday night, until the Monday after an Oct. 29 vote by the creditors of Metro-Goldwyn-Mayer on a bankruptcy plan that would wipe out the studio's debt and see the management of Spyglass Entertainment run the restructured company.

On Thursday, Icahn, who owns about 12% of MGM's debt, moved to thwart the pending deal with Spyglass by offering to buy $963 million of the beleaguered studio's $4 billion in debt at 45 cents on the dollar in hopes of pushing a merger with Lions Gate.

Earlier this month, Icahn supported Lions Gate's bid to merge with MGM, whose future is being decided by approximately 100 creditors. So far, MGM's largest creditors, led by Anchorage Advisors, have been advocating a plan to file a prepackaged bankruptcy petition and emerge with a 95% ownership of a restructured studio headed by Spyglass chief executives Gary Barber and Roger Birnbaum.

But, if Icahn has anything to do with it, creditors will scrap that proposal in favor of a merger with Lions Gate, which would combine two of Hollywood's leading independent studios with a deep library of films and TV shows. If Icahn's new debt offer is successful, he would control more than one-third of MGM's debt, giving him the ability to block the Spyglass deal and approve a combination with Lions Gate.

Icahn and Spyglass have been heavily lobbying MGM creditors in recent weeks to win support for their respective plans.

Icahn is also awaiting a decision by the Supreme Court of British Columbia in a lawsuit he filed against Lions Gate over a recent debt-to-equity transaction that diluted his holdings in the company to 33.5% from 38%.

-- Claudia Eller