Lionsgate Amends Icahn Lawsuit to Derail Proxy Battle

7:14 AM PST 12/06/2010 by Etan Vlessing

Claims Icahn played a double-game with investments in both the mini-studio and Metro-Goldwyn-Mayer Inc.

 

TORONTO -- Lionsgate has amended an earlier lawsuit against Carl Icahn to derail a Dec. 14 proxy fight that could see the billionaire investor install dissident directors in its board room.

Vancouver-based Lionsgate on Dec. 3 filed an amended complaint in a New York court against Icahn for playing a double-game with investments in both the mini-studio and Metro-Goldwyn-Mayer Inc.

Icahn on Monday dismissed Lionsgate's amended complaint, filed in connection with a lawsuit in the United States District Court for the Southern District of New York, as "completely without merit."

The original suit, filed in late October, claimed Icahn had secretly plotted to merge Lionsgate and MGM, even as he publicly opposed such a combination to continue accumulating MGM debt and a larger stake in the mini-studio at a discount.

But the amended complaint takes aim at Icahn's bid to get his five-strong slate of dissident board members voted on by Lionsgate shareholders at a Dec. 14 AGM in Los Angeles.

Icahn's five rebel board nominees for Lionsgate are former Overture Films CEO Chris McGurk, Canadian TV producer Jay Firestone, former Bertelsmann Entertainment executive Michael Dornemann, Princeton economics professor Harold Shapiro, and Daniel Ninivaggi, president of Ichan Enterprises.

Lionsgate in its amended complaint claimed victory as Icahn's son, Brett Icahn, was notably absent from that proxy slate.

"In so doing, the Icahn Group abandoned its prior plan, which had been one of the subjects of Lionsgate's initial complaint, to nominate Icahn's son Brett Icahn to the Lionsgate board," the mini-studio told the New York court.

"While Lionsgate's initial complaint has thus already achieved benefits for the company and all of its shareholders, Lionsgate files this amended complaint to remedy remaining legal wrongs, including the Icahn Group's continued failure to disclose the extent of the Icahn Group's MGM debtholdings and the history of its trading activity in MGM debt," Lionsgate added.

Lionsgate in its amended complaint also claimed McGurk was a long-time advisor for Icahn as the billionaire investor had both the mini-studio and the hobbled studio in his cross-hairs.

Lionsgate unveiled its own slate of directors, with eleven of its incumbent directors up for re-election, and Frank Guistra added as the twelfth nominee.

In its amended complaint, Lionsgate reiterated its complaint against Icahn for double-dealing as both parties alternately fought a high-profile battle for control of the mini-studio, and pacted to take a run at MGM.

"While urging Lionsgate shareholders to support his takeover campaign to ensure that Lionsgate did not pursue what he called a 'delusional' MGM transaction, Icahn quietly studied the merits of a Lionsgate-MGM transaction and amassed a huge position in MGM debt with the undisclosed intention of reaping profits from both sides in an eventual merger," the amended complaint states.

Lionsgate added that its shareholders are "entitled to know all material facts bearing on lcahn's conflict of interest as both an MGM debtholder and a Lionsgate shareholder."

The mini-studio is seeking preliminary and permanent injunctive relief for the Icahn Group's "interference in its prospective business relations with potential merger partners."

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