Lionsgate gets new terms from lenders

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Take that, Carl Icahn! Lionsgate Entertainment announced that its lenders have amended its revolving credit facility to change the definition of a change of control, effectively thwarting the efforts of Carl Icahn to push the company into default as he seeks to oust current management and take over.


The change of control threshold had previously been 20% ownership and Icahn had moved beyond that to 32% with his recent tender to buy shares at $7 each. As Icahn blamed the company’s board for allowing the technical default to occur, Lionsgate was assuring investors that it was confident of getting new terms from its lenders – and indeed it has.

The bank syndicate led by JPMorgan Chase Bank has amended the $340 million revolving credit facility to raise the change of control threshold to 50% ownership. The company said the loan agreement still carries “a favorable interest rate of LIBOR plus 2.50%” and that other key provisions remain unchanged.

The board of directors at Lionsgate had advised shareholders against tendering their shares to Icahn, although some obviously did. It has also advised them against tendering under the new offer from Icahn, also at $7 per share, which is scheduled to expire June 30th.

RBR-TVBR observation: Where will the next battle be fought in this war? It appears that Lionsgate’s largest institutional shareholders are standing with management – or at last holding out for a better offer from Icahn. It seems unlikely that he is going to take control of the in dependent movie/TV studio at $7 per share, but he is going to be a very large and disgruntled shareholder for the board and management to deal with.