Lionsgate Cuts Carl Icahn Off At The Pass

…and the surprises keep coming! Just hours before Carl Icahn’s initial offer to purchase Lionsgate’s debt was expected to expire, which we predicted would cause him to extend the offer, Lionsgate’s trying to cut him off at the pass.

The studio is refinancing its debt, negotiating with its noteholders to exchange $66.6 million worth of their existing notes due in 2025 for a new batch of the same bonds that offer frequent interest payouts and a sweet conversion rate. Oh, and one other thing: as part of the deal, debtholders have to agree not to sell any of their 2024 notes to Carl Icahn, or “tender” them into the “existing tender offer.” Take that!

Given the strong level of support among Lionsgate’s major shareholders for the current management, including the backing of Lionsgate’s largest debtholder John Kornitzer, it’s very likely the studio will get its debtholders to agree to this new deal before Carl Icahn gets a majority of the notes he’s after. Regardless, this new offer introduces a significant, and unexpected, wrinkle into Icahn’s plan to keep going after the studio.

What will happen when Icahn’s offer expires this afternoon? Will he give up? Keep fighting? We’ll see.

The market, meanwhile, has already rejected Lionsgate’s move (announced at 9:40 this morning). Shares are down 16% so far today.

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