Board protecting its Image as it fights off Lionsgate

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Image Entertainment Inc. has rebuffed Lionsgate's attempts to buy the company by re-electing all seven members of its board, beating the slate of directors Lionsgate was backing. The election was held Oct. 10.

"We are obviously pleased with the results of the election and the support of our shareholders to keep our entire board in place," Image Entertainment chairman and CEO Martin Greenwald said. "The board, management and the company as a whole will continue with our ongoing strategy and process of seeking to maximize long-term value on behalf of all of our shareholders."

Image said votes for its incumbent slate ranged from 56.1%-56.2% of the shares voted, while votes for Lionsgate's dissident slate ranged from 37.8%-43.3%.

Metromedia founder and chairman John Kluge and partner Stuart Subotnick own 28% of Image's common stock. Standard Broadcasting holds 7% and Image's current management team makes up another 7%, making the longtime stockholder groups closely aligned with Image's management owners of 42% of the company's stock.

Lionsgate, Image's second-largest shareholder with close to 20% of the company's shares, has not yet decided what its course of action regarding Image will be. Lionsgate's board of directors did receive more than 80% of the votes cast by independent stockholders (those aligned with neither Lionsgate nor Image), a sign that Lionsgate calls encouraging.

"The independent stockholders of Image have joined us in expressing their desire to see Image's board and senior management increase its commitment to stockholder value," Lionsgate vice chairman Michael Burns said.

"We do believe that we could better manage the assets of Image because of our infrastructure," said Burns, who helped grow Lionsgate through video library acquisitions including Artisan Entertainment and Trimark. "This is consistent with the way we've built Lionsgate. We have a successful track record of acquisitions and subsequent integrations."

As a precaution against other takeover attempts, Image has staggered the election terms of its board of directors. Greenwald, Lynwood Spinks and Gary Haber will serve three-year terms; David Coriat and Ira Epstein will serve an initial two-year term and M. Trevenen Huxley and Robert McCloskey will serve an initial one-year term.

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