Lionsgate Wins Court Battle Against Carl Icahn in New York
The decision makes it much harder for Icahn to get his board of nominees approved at Tuesday's showdown.
TORONTO -- Lionsgate has won a key legal victory against Carl Icahn ahead of their showdown Tuesday in Los Angeles.
The Supreme Court of the state of New York on Thursday denied a bid by the Icahn Group to unwind a July 20 debt-for-equity transaction that threatens to sink Icahn's proxy fight at Lionsgate's December 14 annual general meeting.
The court also denied Icahn a preliminary injunction against Mark Rachesky, a major Lionsgate shareholder, from voting shares next week that he acquired as part of the July 20 transaction.
"The Icahn Group has not made an actual showing that it would be irreparably and inequitably harmed by the denial of the preliminary injunction," Justice James Yates said in his decision.
Lionsgate welcomed the New York court denying Icahn legal bid surrounding its July deleveraging transaction, which opens the way to Rachesky voting his entire stake on December 14.
"The company believes that the transaction, which resulted in the reduction of Lionsgate's debt by approximately $100 million, supported the best interests of the company and its shareholders," Lionsgate said in a statement.
The court heard oral arguments on December 3 surrounding the lawsuit, which aimed to stop Rachesky from voting the July 20 shares, or impacting the December 14 vote on Lionsgate's board of directors with that stake.
In the end, the court ruled Icahn's has no claim on the July 20 shares now held by Rachesky, whatever commitments he had from Lionsgate as part of a 10-day detente leading up to the offending debt-for-equity deal.
"Although Icahn is an alleged aggrieved party to a breach of the standstill agreement, he does not have a property interest in the shares held by Rachesky, regardless of the ultimate decision regarding the alleged breach," Justice Yate wrote in a four-page decision.
The court did offer hope to Icahn, however, by suggesting he can wage another proxy fight at Lionsgate's September 2011 shareholders' meeting.
"In effect, denial of the preliminary injunction at this time will permit existing shareholders to vote on December 14, while giving Icahn, if he loses the proxy fight on that day, and should he prevail in the ensuring litigation, an opportunity for a new election with votes counted as he seeks in less than ten months," the ruling stated.