By Michael White
March 12 (Bloomberg) -- Carl Icahn offered to buy as much as $325 million of Lions Gate Entertainment Corp.’s convertible debt, escalating a fight with Hollywood’s largest independent film studio.
The billionaire investor, who holds 14.5 percent of the Vancouver-based film company’s shares, announced the tender offers in an e-mailed statement today. Terms will be announced later, he said.
Icahn’s bid follows a breakdown yesterday in negotiations to acquire seats on Lions Gate’s board. Buying the debt, which can be converted to stock, will give him more leverage over the company, whose film library includes the “Saw” horror films and Tyler Perry’s “Madea” comedies.
“I do not advocate a sale of the company in this economic environment,” Icahn said in an e-mailed statement. He declined to offer details of his plans.
Lions Gate has been cutting costs and reduced its film slate after reporting a third-quarter loss of $93.4 million last month. Icahn, 73, has increased his stake from 3.7 percent since October.
Once conditions improve, Icahn may still seek a sale of the company, said Richard Dorfman, chief executive officer of the New York investment firm Richard Alan Inc. He may also push for a separate sale of the company’s film library.
“Saying he doesn’t want to sell it immediately doesn’t preclude selling it when market conditions are more favorable,” said Dorfman, who backs Icahn’s move. “He’s positioning it to be done at some point in the future.”
Cost Cuts
Richard Alan owns Lions Gate stock, Dorfman said, without disclosing how much. The tender offer probably will be consistent with Lions Gate’s current share price, he said.
Studio spokesman Peter Wilkes didn’t return a call seeking comment.
Lions Gate, run from Santa Monica, California, fell 27 cents to $4.69 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 15 percent this year.
Lions Gate discussed giving board seats to Icahn over three weeks. The discussions ended yesterday in a dispute over terms of a standstill agreement.
“I was quite surprised, having conceded to a standstill on tender offers and proxy fights, that the company refused to agree that those standstill provisions would also apply to other large shareholders that were given a position on the board,” Icahn said today.
To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net
Last Updated: March 12, 2009 20:42 EDT
