Lionsgate lashes out at Icahn
Sends letter to shareholders as proxy fight loomsBANFF, ALBERTA -- Never mind personal. The Lionsgate-Carl Icahn feud has turned nasty.
Vancouver-based Lionsgate in a June 14 letter to investors said the activist shareholder has a history of "value destruction and self-serving actions" after Icahn on Friday warned of a possible bankruptcy at the mini-studio.
Lionsgate lashing out at Icahn comes as the billionaire investor's current $7-per-share tender offer gets set to expire Wednesday.
The mini-studio pointed to publicly traded companies like Blockbuster, WCI Communities and BKF Capital that allegedly saw their share value plunge after Icahn secured board representation or operational control.
"In addition to our concerns about Carl Icahn's record of value destruction, Mr. Icahn's involvement on the board of directors of Blockbuster specifically underscores serious questions about his obvious lack of knowledge and understanding of the media business," Lionsgate added.
The mini-studio even pointed to Icahn's flagship fund, Icahn Enterprises, having apparently fallen 71% in value to $38.74 from a 2007 high.
"If Mr. Icahn cannot create value in his own funds, how can he do so in an industry in which he has limited and unsuccessful experience?" Lionsgate questioned in its latest overture to company shareholders.
The mini-studio also opened up on Icahn's movie production and distribution track record with Stratosphere Entertainment, launched in September 1997 with Paul Cohen.
"After 18 months of losing money, Mr. Icahn replaced Mr. Cohen with Richard Abromowitz, and Stratosphere continued to deliver boxoffice failures" before it was shuttered in 2000, Lionsgate recounted.
The lesson, the letter to shareholders added, was tendering Lionsgate shares to Icahn invites the same fate.
"Clearly, Mr. Icahn did not know how to run a movie company back in 1997 when he founded Stratosphere and has done nothing to prove that he knows how to run one now," Lionsgate argued.
"Do NOT let him destroy the value of Lionsgate. Do NOT tender your shares to him for U.S. $7 per share," it added.
In his own scathing open letter to shareholders issued Friday, Icahn branded Lionsgate's current senior management as "an abject failure," and pledged to replace the current board of directors with his own slate of representatives via a proxy fight.
Icahn added the current Lionsgate board was "dangerously detached from reality," and that the mini-studio was "racing down the wrong road at breakneck speed toward a precipice."