By Sue Zeidler
LOS ANGELES, April 21 (Reuters) - Carl Icahn has extended a tender for $316 million in Lions Gate Entertainment Corp notes after attracting only $8 million worth and two holders agreed to keep 28 percent out of his hands.
The billionaire investor, who has said he may wage a proxy war for Lions Gate, pushed the expiration date to May 1 from April 20, saying he was extending it because a deal made between Lions Gate and two bondholders on Monday came at the expense of all shareholders and other bondholders and may have confused some bondholders.
Analysts said there was growing perception the studio, home to the 'Saw' horror movie franchise, was moving aggressively to thwart Icahn's advances and was holding its own -- for now.
'There is a bit of chess match going on there. I don't get the sense the shareholder base at Lions Gate is that disgruntled or is lining up with Icahn,' said James Marsh, an analyst with Piper Jaffray & Co.
The studio's shares rose 13 cents, or 2.8 percent, to close at $4.79 each on Tuesday after falling 13 percent on Monday, the day the company reached a deal with two bondholders to keep 28 percent of the convertible debt out of Icahn's hands.
Icahn, who controls 14.5 percent of the company, has criticized Lions Gate for its $255 million purchase of the TV Guide cable channel. While he has not outlined plans for the studio should he gain control, he has said he does not want to push a sale in the current environment.
Both Marsh and and other analysts said the stock fell on Monday on the view that recent defensive tactics by the company, which has assembled an advisory team for that purpose , appeared to be working.
'Lions Gate appears to be getting more combative with the Icahn effort to buy equity and convertible debt. This move takes near-term sale/takeover/value-unlocking speculation away from the stock,' said Miller Tabak analyst David Joyce. He was referring to the debt exchange announced on Monday and a provision for some holders not to tender notes to Icahn.
Under the deal, Lions Gate exchanged $66.6 million of new debt to two major holders of 3.625 percent senior subordinated notes, pushing back the 'put date' to 2015 from 2012 and lowering the strike price to $8.25 from $14.28 per unit.
One of the holders also agreed not to tender $24 million of 2.937 percent convertible senior subordinated notes.
In all, a total of $90.6 million, or 28 percent of the company's $316 million in notes, are now out of Icahn's grasp.
'There's been the perception that Lions Gate has been in play, which is usually good for equity holders,' Marsh said. 'But at the end of the day, Lions Gate has attractive assets and I think management has the confidence of most shareholders. They have to perform now.'
Since reporting a quarterly net loss of $93.4 million in February, Lions Gate has had a good streak at the box office with 'My Bloody Valentine 3-D', 'Tyler Perry's Madea Goes To Jail' and 'The Haunting in Connecticut', although the recent opening for its action film 'Crank 2' disappointed analysts.
Lions Gate is projected to post another loss in the quarter because marketing costs for wide releases are expensed as incurred. But it has said it expects a swing to positive earnings before interest and taxes of more than $50 million for fiscal 2010.
(Reporting by Sue Zeidler; Editing by Andre Grenon) Keywords: LIONSGATE ICAHN (susan.zeidler@thomsonreuters.com +1 213 955 6748; Reuters Messaging: susan.zeidler.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
LOS ANGELES, April 21 (Reuters) - Carl Icahn has extended a tender for $316 million in Lions Gate Entertainment Corp notes after attracting only $8 million worth and two holders agreed to keep 28 percent out of his hands.
The billionaire investor, who has said he may wage a proxy war for Lions Gate, pushed the expiration date to May 1 from April 20, saying he was extending it because a deal made between Lions Gate and two bondholders on Monday came at the expense of all shareholders and other bondholders and may have confused some bondholders.
Analysts said there was growing perception the studio, home to the 'Saw' horror movie franchise, was moving aggressively to thwart Icahn's advances and was holding its own -- for now.
'There is a bit of chess match going on there. I don't get the sense the shareholder base at Lions Gate is that disgruntled or is lining up with Icahn,' said James Marsh, an analyst with Piper Jaffray & Co.
The studio's shares rose 13 cents, or 2.8 percent, to close at $4.79 each on Tuesday after falling 13 percent on Monday, the day the company reached a deal with two bondholders to keep 28 percent of the convertible debt out of Icahn's hands.
Icahn, who controls 14.5 percent of the company, has criticized Lions Gate for its $255 million purchase of the TV Guide cable channel. While he has not outlined plans for the studio should he gain control, he has said he does not want to push a sale in the current environment.
Both Marsh and and other analysts said the stock fell on Monday on the view that recent defensive tactics by the company, which has assembled an advisory team for that purpose , appeared to be working.
'Lions Gate appears to be getting more combative with the Icahn effort to buy equity and convertible debt. This move takes near-term sale/takeover/value-unlocking speculation away from the stock,' said Miller Tabak analyst David Joyce. He was referring to the debt exchange announced on Monday and a provision for some holders not to tender notes to Icahn.
Under the deal, Lions Gate exchanged $66.6 million of new debt to two major holders of 3.625 percent senior subordinated notes, pushing back the 'put date' to 2015 from 2012 and lowering the strike price to $8.25 from $14.28 per unit.
One of the holders also agreed not to tender $24 million of 2.937 percent convertible senior subordinated notes.
In all, a total of $90.6 million, or 28 percent of the company's $316 million in notes, are now out of Icahn's grasp.
'There's been the perception that Lions Gate has been in play, which is usually good for equity holders,' Marsh said. 'But at the end of the day, Lions Gate has attractive assets and I think management has the confidence of most shareholders. They have to perform now.'
Since reporting a quarterly net loss of $93.4 million in February, Lions Gate has had a good streak at the box office with 'My Bloody Valentine 3-D', 'Tyler Perry's Madea Goes To Jail' and 'The Haunting in Connecticut', although the recent opening for its action film 'Crank 2' disappointed analysts.
Lions Gate is projected to post another loss in the quarter because marketing costs for wide releases are expensed as incurred. But it has said it expects a swing to positive earnings before interest and taxes of more than $50 million for fiscal 2010.
(Reporting by Sue Zeidler; Editing by Andre Grenon) Keywords: LIONSGATE ICAHN (susan.zeidler@thomsonreuters.com +1 213 955 6748; Reuters Messaging: susan.zeidler.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.