Lionsgate amends credit facility
Staves off bankruptcy threat from Carl IcahnTORONTO -- Lionsgate has managed to stop flirting with a potential debt default.
The Vancouver-based mini-studio on Tuesday secured a "change of control" amendment from senior lenders to stave off an immediate bankruptcy threat from Carl Icahn.
Icahn, Lionsgate's largest shareholder with a 31.8% stake after a just-concluded tender offer, until now needed only 20% of Lionsgate shares to trigger a default under the terms of the mini-studio's $340 million credit facility.
But after recent negotiations, a lending syndicate led by JPMorgan has agreed to raise the trigger for a technical default to 50% control or ownership of company shares.
"The company noted that the credit facility continues to carry a favorable interest rate of LIBOR plus 2.50%, and that other key financial terms and provisions remain unchanged," Lionsgate added Tuesday in a statement.
Icahn is currently mopping up remaining company shares during a subsequent offering period to June 30, but is not expected to secure majority control of the Vancouver-based mini-studio.
The next step in Icahn's escalating feud with Lionsgate is a planned proxy fight at the company's upcoming shareholders meeting, likely in September in Toronto.