Judge denies Icahn's bid for injunction against Lionsgate (LAT, THR, DH, VAR, NYP)

By Nancy Tartaglione

In a key legal victory for Lionsgate, a NY judge has denied Carl Icahn a preliminary injunction to block Mark Rachesky, the company's second-largest shareholder, from voting shares he received in a $100 million debt-for-equity swap in July. That deleveraging resulted in diluting Icahn's Lionsgate stake to about 33% and increasing Rachesky's to about 29%. The court's decision now opens a path for Rachesky to vote all of his shares at a December 14 annual meeting where Icahn seeks to put five of his own nominees on the board.

In comments to The Los Angeles Times earlier this week, Icahn said that he needed a win in the NY court in order to have a shot at winning the five board seats he wants.

As The Hollywood Reporter notes, the court did suggest that Icahn can wage another proxy fight at Lionsgate's September 2011 shareholders' meeting.

"In effect, denial of the preliminary injunction at this time will permit existing shareholders to vote on December 14, while giving Icahn, if he loses the proxy fight on that day, and should he prevail in the ensuring litigation, an opportunity for a new election with votes counted as he seeks in less than ten months," the judge's ruling stated.

Meanwhile, an unaffiliated Lionsgate shareholder told The New York Post that Icahn "should cut a deal, go on the board, and engineer an MGM merger."

Lionsgate management has previously offered Icahn a board seat, the shareholder told The Post, so it would likely do so again.

Lionsgate and MGM had been in merger talks and are more likely to combine if MGM knows that the team with whom it negotiates will remain past the merger, the shareholder told the paper. "This might clear the way."

Earlier Thursday, Icahn won a partial victory when Institutional Shareholder Services backed three of his five board nominees: producer Jay Firestone, former BMG exec Michael Dornemann and Icahn Enterprises president Daniel Ninivaggi.