Icahn ups Lionsgate stake again (REU, VAR, LAT)

By Nancy Tartaglione

Carl Icahn is at it again. After a Tuesday disclosure that he had acquired 389,400 Lionsgate shares since last Friday, the activist investor yesterday upped his holding in the studio from 15.9% to 16.9%. Ichan, who has been openly critical of Lionsgate management, has steadily been acquiring more shares in the stuido.

According to Lionsgate change of control provisions, if any individual shareholder acquires more than 20% of the shares, it could cause a default on the indie’s $340 million revolving credit line. Reports suggest that Icahn will continue to ratchet up his stake to as much as 19.9%.

While Mark Rachesky, a former Icahn associate, also owns nearly 20%, he has been more favorable toward management and is expected to be nominated to a board seat at the company's annual meeting in September.

Icahn has been unsuccessful in his bid to garner seats on the board. According to Reuters, in a statement and a securities filing yesterday, a number of Icahn-controlled companies said they had discussions with Lionsgate’s Jon Feltheimer and Michael Burns and may seek to add nominees to the board by removing directors or expanding the size of the board.

They further said they had acquired the new shares "in the belief that the common shares of Lions Gate were undervalued" and that they may buy more.

Earlier this year, Icahn tried unsuccessfully to buy $325 million worth of convertible notes issued by the studio in the hope of converting them to equity to raise his stake to 29%.

Shares of Lionsgate jumped 9% to $5.60 in after-hours trading Wednesday after declining 9¢ during the regular session.