Lions Gate board remains neutral about Icahn's tender offer for convertibles

By Angela McDaniels

Tacoma, Wash., March 26 - Lions Gate Entertainment Inc. said its board of directors remains neutral toward the unsolicited tender offer made by some affiliates of Carl Icahn for the company's $150 million 2.9375% convertible senior subordinated notes due 2024 and $175 million 3.625% convertible senior subordinated notes due 2025.

For each $1,000 principal amount, Icahn's group is offering $750 for the 2.9375% convertibles and $730 for the 3.625% convertibles plus accrued interest to the purchase date.

The board expressed no opinion about the offer but said in a news release that noteholders should be aware of the following factors in deciding whether or not to tender:

• The acquisition of more than 20% of the equity of parent company Lions Gate Entertainment Corp. may constitute a change of control under Lions Gate's secured revolving credit facility. This could result in an event of default and acceleration of the debt, and a change in control under the revolver could result in a cross-default and acceleration of Lions Gate's other outstanding debt;

• The convertibles have upcoming put options at prices greater than those being offered by Icahn. The 2.9375% convertibles are putable at par plus accrued interest on Oct. 15, 2011, and the 3.625% convertibles are putable at par plus accrued interest on March 15, 2012; and

• If holders tender their convertibles, the Icahn group could realize a significant gain on those convertibles if it then exercises the put options.

Icahn has not announced any plans to make an offer to buy shares of Lions Gate's parent company, the release noted.

As previously reported, Icahn had been in discussions with the company about adding some designees to the board of directors. In a prior statement, Icahn said these discussions were terminated because agreement could not be reached about some aspects of the standstill agreement that Lions Gate required as a condition to installing those board members.

The investor and his affiliates own 14.5% of the company's common stock.

D.F. King & Co., Inc. (Edward McCarthy or Kristian Klein at 212 269-5550) is the information agent for the tender offer.

Lions Gate Entertainment Inc. is a Santa Monica, Calif.-based subsidiary of Lions Gate Entertainment Corp., which is a filmed entertainment studio with headquarters in Vancouver, B.C.

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