Lenders Agree to Aid Lions Gate


Lions Gate Entertainment Corp. on Tuesday said that its lenders have changed a provision on its lending agreement, which for now removes risk of default that emerged last week when activist shareholder Carl Icahn got a larger stake in the company.

The Santa Monica film and TV studio, whose corporate headquarters are in Vancouver, British Columbia, said its lead lender, JPMorgan Chase Bank, N.A, secured the consent of the lending syndicate to modify the provisions on its $340 million revolving credit facility. Now, a single shareholder would have to gain 50 percent control of shares, instead of 20 percent, to trigger the provision, which requires the company to immediately pay back its debt if lenders demand it.

Icahn passed the 20 percent level last week when shareholders tendered to him 13 percent of Lions Gate common shares, which raised the billionaire investor’s stake to 32 percent. That is likely to increase his chances of gaining at least one seat on the board, though Icahn has threatened a proxy battle to gain even more control.

Lions Gate said its credit facility continues to carry a “favorable” interest rate of LIBOR (the benchmark London Interbank Offered Rate) plus 2.5 percentage points, and other key financial terms and provisions remain unchanged.

Shares were up 1 cent, or less than a percent, to $7 in midday trading on the New York Stock Exchange.

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