Instant profit of almost $5M if tendered to Icahn at $6.50. Why not? If they don't tender, the stock will likely head back toward $5 which will only allow Icahn to accumulate on the open market for much less than $6.50.
Andy - Judging from MHR probable performance (based on their six large holdings ....especially Loral Space) my guess is that Rachesky has or will have the ability to allocate significantly more to LGF if he wishes,
Is this news really that great? First of all there is dilution. Second of all, what's to stop the fund from selling their shares to Icahn? I would guess its easier for him to negotiate with this one company to aquire a majority number of shares.
I used to be a shareholder but sold when I could in the 7's just because I didn't like management's actions which seem to kill the shareprice on any rally (new poison pill being an example).
How hard is it for Icahn to just buy the shares on the open market? Or to basically collude and have Cuban buy them and sell them again to Icahn. I always wonder about the formality of the takeover and about why the shares can't be purchased in the open market, simply because the shares seem to be available at or close to Icahn's offer price.
Rachesky ups stake to 39,419,126 Common Shares, representing approximately 28.9% vs Ichan's 33.5% - the sandbox just got a little more crowded!
On July 20, 2010, an investment fund affiliated with MHR Fund Management LLC purchased from Kornitzer Capital Management, Inc. $63,709,000 principal amount of the 2.9375% Convertible Senior Subordinated Notes due 2026 (the "2026 Notes") and $36,009,000 principal amount of 3.625% Convertible Senior Subordinated Notes due 2027 (the "2027 Notes" and, together with the 2026 Notes, the "Purchased Notes") of Lions Gate Entertainment Inc., a Delaware corporation ("LGEI") and a wholly-owned subsidiary of Lions Gate Entertainment Corp. ("Lions Gate"). The Purchased Notes represent all of the outstanding 2026 and 2027 Notes. The purchase was made pursuant to a purchase agreement executed on the same day between MHR Institutional Partners III LP ("Institutional Partners III") and Kornitzer Capital Management, Inc. The aggregate purchase price for the Purchased Notes was $105,650,993.63 (or approximately Cdn.$ 111,440,668).
Also on July 20, 2010, in accordance with the terms of the Purchased Notes, Institutional Partners III exercised its right to convert the Purchased Notes into 16,236,305 common shares of Lions Gate ("Common Shares") at a conversion price per Common Share of $6.20 (or approximately Cdn.$6.54). The Common Shares acquired upon conversion of the Purchased Notes represent approximately 11.9% of the Common Shares outstanding after giving effect to the conversion of the Purchased Notes.
As a result of the transactions described above, MHR Fund Management LLC and its joint actors (collectively, "MHR") may be deemed to be the beneficial owners of 39,419,126 Common Shares, representing approximately 28.9% of the Common Shares outstanding after giving effect to the conversion of the Purchased Notes.
The Common Shares were acquired by Institutional Partners III based on the view that the Common Shares represented an attractive investment opportunity. MHR reviews its holdings in Lions Gate on a continuing basis and as part of this ongoing review, evaluates various alternatives that are or may become available with respect to Lions Gate and its securities. MHR may from time to time and at any time, in its sole discretion, acquire or cause to be acquired, additional equity or debt securities or other instruments of Lions Gate, its subsidiaries or affiliates, or dispose or cause to be disposed, such equity or debt securities or instruments, in any amount that MHR may determine in its sole discretion, through open market transactions, privately negotiated transactions or otherwise.