Carl Icahn, who has made a hostile bid for Lions Gate Entertainment Corp., told a judge through his lawyer he will seek to block board member Mark Rachesky from voting his shares at the studio’s Dec. 14 annual meeting.
Icahn, the billionaire chairman of New York-based Icahn Enterprises LP, will file the motion to suspend Rachesky’s voting power in New York state Supreme Court Nov. 15, attorney Joseph DiBenedetto told Justice James Yates today.
Icahn, 74, who is attempting to buy the independent film and TV studio for $7.50 a share, sued Vancouver-based Lions Gate in both Canada and New York in July to reverse an equity-for- debt swap that increased Rachesky’s stake to almost 29 percent. Icahn argues that management conspired with large shareholders to thwart his bid.
The Supreme Court of British Columbia on Nov. 1 dismissed the Canadian suit by Icahn to undo the deal. Icahn has appealed. An appeals judge on Nov. 5 denied his request for an expedited hearing. Lions Gate told the New York judge today the Canadian ruling supports its motion to dismiss the New York case and said there is no reasonable basis for a court order against Rachesky.
“This court cannot rule in the Icahn Group’s favor without holding that the British Columbia court got it wrong,” Lions Gate attorney William Savitt wrote in a letter today to Yates. “This is precisely the situation that this court wished to avoid when it noted at the September 17 conference that it ‘would drop this case like a hot potato’ in the event the British Columbia court issued a clear ruling.”
Savitt’s letter responded to a Nov. 8 letter from DiBenedetto to Yates that said the Canadian ruling didn’t resolve the legal dispute in New York and that the “entire contract issue remains ripe for decision by this court.”
In July, Lions Gate issued new shares to Rachesky’s MHR Fund Management LLC, putting 12 percent more of the stock in friendly hands and diluting Icahn’s holding. Rachesky increased his stake by purchasing $100 million of notes from Kornitzer Capital Management and then exchanging them for stock. Icahn has called the transaction a “sham.”
The studio, distributor the “Saw” horror films and producer of the Emmy-winning “Mad Men” TV series, announced the Rachesky deal days after a 10-day truce with Icahn expired.
Icahn claimed that Rachesky and other board members should be barred from voting their shares when he sued Lions Gate in New York Supreme Court on July 26.
Lions Gate is based in Vancouver and run from Santa Monica, California.
The case is Icahn v. Lions Gate, 651076/2010, New York state Supreme Court, New York County (Manhattan).