Lionsgate filing might be response to Icahn
Firm may raise up to $750 mil for acquisitions, other thingsA day after large stakeholder Carl Icahn said Lionsgate should not make any big purchases without putting it to a shareholder vote, the film and TV company said it might raise as much as $750 million for, among other things, acquisitions.
Lionsgate has already bid about $1.5 billion for MGM and also is interested in Miramax, which Disney is hoping will fetch about $700 million. So a filing that allows -- but does not obligate -- Lionsgate to raise a large sum of money through stock and debt isn't surprising.
While the timing of such a filing doesn't necessarily suggest that a strategic dance with Icahn is afoot, it is a necessary step if Lionsgate is to have its financial ducks in a row should it win a bidding war for either Miramax or MGM.
Lionsgate's market cap -- at $640 million Wednesday -- was under a $700 million minimum, requiring that such a registration be made if it is to tap debt and equity markets for large sums of money.
Icahn's intention, meanwhile, is to make a tender offer for more than 13 million shares of Lionsgate stock at $6 apiece, a 15% premium over Friday's price and an 11% premium to Wednesday's close. His offer comes with strings attached that could limit Lionsgate's ability to raise money and make big purchases.
If Icahn's tender offer happens, it would take his stake from 18.9% to 29.9%, just under a 30% threshold that could trigger millions of dollars in payments to Lionsgate executives.
Lionsgate shares fell a nickel to $5.43 on Wednesday, giving the company an enterprise value of $978 million, including $438 million in debt and $105 million in cash on hand.