Lionsgate shareholders vote for poison pill

Company secures 55.7 % in favor of shareholder rights plan

TORONTO -- Lionsgate had enough votes Wednesday to adopt its poison pill, even if a rebuffed Carl Icahn earlier had the anti-takeover defense invalidated.

Lionsgate secured a 55.7% vote in favor of its shareholder rights plan, with a sizeable 44.3% voting against, and 1.3% abstaining.

In all, shareholders representing 107.2 million shares, or 90.9% of stock in the company, cast votes on the proposal.

Icahn did not attend the sparsely attended shareholder meeting at the Four Seasons Hotel in Toronto, as his hostile offer for all of Lionsgate stock continues to unfold.

Icahn instead sent three lawyers from Toronto firm Osler, Hoskin and Harcourt to oversee the meeting.

Before the poison pill vote, Lionsgate CEO Jon Feltheimer touted his growing library, and urged shareholders to "take the longer view of the business."

"Our plan is working. Our business is on track," he added.

Lionsgate management, led by Feltheimer, came into the shareholders' vote with backing from a majority of stockholders, led by Mark Rachesky and his 19.7% stake.

But with the shareholders right plan earlier voided by the British Columbia Securities Commission, Icahn can consummate his takeover if he can bring more shareholders on side before his current tender offer expires on May 21.

Lionsgate reiterated that it continues to weigh "alternatives" regarding the British Columbia Securities Commission's ruling to cease trade its shareholders rights plan.

The poison pill plan aims to thwart Icahn's designs for control of Lionsgate by allowing company shareholders to buy more stock at a discount.

Icahn, who holds a near-19% stake in Lionsgate, is offering $7.00 per-share for the mini-studio.

Andrew MacDougall, a lawyer with Toronto-based Osler, declined to comment on Icahn's next move.

But Icahn's next step could be to stage a proxy fight to overthrow the Lionsgate leadership, or increase his offer price to entice larger stockholders like Rachesky to his side.

After the shareholders meeting, Feltheimer conceded the poison pill vote was in part a public relations gesture to underline investor support for his fight against a hostile tender offer.

"Today's vote clearly demonstrates that, in spite of Carl Icahn's vote being included in the vote total, that we have overwhelming support of the shareholders for this shareholders right plan," he told reporters in Toronto.

Lionsgate estimated that, excluding Icahn's voting block, the company secured 70.4% in favor of the poison pill strategy.

Feltheimer gave nothing away about his next step against Icahn's offensive, including possible legal remedies, beyond indicating the current unsolicited tender offer was "inadequate."

"Whatever conversations happen after this, we'll see," he said.

Asked what a fair price for mini-studio might be, Lionsgate vice-chairman Michael Burns said only "higher than $7.00."

Burns added that Lionsgate recently made long-term investments in EPIX and its TV Guide properties that eventually will guide the company's stock price higher to former heights.

"It's not about one quarter or two quarters. We have momentum. These are long term plays that we think will be incredibly valuable to shareholders over time," he said.

Meanwhile, both Lionsgate and Icahn continue to lobby Canadian politicians to back their corners, as Ottawa wakes up to the potential for a Canadian-based studio run from Santa Monica to be controlled by an American company and possibly shift its headquarters south.

The all-party Standing Committee on Canadian Heritage in Ottawa on Tuesday took the issue up.

Charlie Angus of the opposition NDP party called on the members of Parliament to investigate the damage to the Canadian production sector from Lionsgate leaving Canada.

"Lionsgate is a key economic and cultural driver. A hostile takeover by U.S. interests could have serious implications," Angus said.

Icahn has received anti-trust clearance for his Lionsgate bid from Canada's competition bureau, but has yet to secure approval from Canadian heritage department, which must clear all foreign takeovers of culturally sensitive media companies.

Feltheimer pointed to the recent production of Lionsgate's TV pilot "Wilde's Kingdom" in Vancouver and the TV series "Blue Mountain State" in Montreal as underlining the mini-studio's commitment to Canada.
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