Lions Gate Entertainment Corp. on Monday appealed directly to shareholders to thwart a hostile takeover attempt by billionaire activist shareholder Carl Icahn that it calls "inadequate, opportunistic and coercive."
In a letter to stockholders, CEO Jon Feltheimer and Vice Chairman Michael Burns said Icahn's offer to buy up all the shares of the company for $6 apiece was not good enough.
They urged shareholders to approve Lions Gate's shareholder rights plan at a special meeting on May 4, which would better protect the movie studio from unwanted takeovers.
A representative of Icahn did not immediately respond to a request for comment.
Icahn already owns about 19 percent of the shares of the studio, which is based in Vancouver, British Columbia, but operates out of Santa Monica, Calif.
Lions Gate said that if Icahn accumulates a stake of more than 20 percent, the movie studio could be forced to repay everything it owes on current credit facilities. While Icahn has offered bridge financing if Lions Gate should default on a loan, the movie studio said it can't guarantee that an agreement with the billionaire or anyone else could be reached.
The company also said that Icahn is looking to buy the company on the cheap, because media industry valuations are under pressure right now.
Lions Gate shares slipped 2 cents to close at $6.22 Monday, but are still above the price Icahn has offered.
Knowing that shareholders might not want to close the door to future buyouts of Lions Gate, the company said its shareholder rights plan does not preclude other offers or stop a proxy fight that would install directors more amenable to a takeover attempt.
Lions Gate said Icahn can make an offer for the company that would not trigger the shareholder rights plan, but that he refuses to do so.
Such an offer would require a suitor to commit to completing the transaction only if more than 50 percent of shareholders agree. Lions Gate has been against the idea that Icahn could veto major decisions if he acquires a large minority stake through his offer.
"We're not going to let somebody do what he's suggesting," Burns said in an interview.
The company also argued that Icahn has not disclosed his own plans for running the company and is not knowledgeable about the industry.
It noted that when Icahn sat on the board of Blockbuster Inc., the movie rental company continued to post losses that threatened its survival. Lions Gate said he later left the board and sold a big portion of his holdings at a loss.
Lions Gate told shareholders that it would be a "grave mistake" to allow Icahn to take control of the company.
Lions Gate was behind the Oscar-winning movie "Precious: Based on the Novel 'Push' By Sapphire." It also owns the TV Guide network and made the "Saw" horror movies and such television shows as "Weeds" and "Nurse Jackie."
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