The title of Image Entertainment's current DVD release "Angry Harvest" sums up the Chatsworth-based company's relationship with its second-largest shareholder, Lions Gate Entertainment Corp.


The latest round of squabbling started on Sept. 12 when Lions Gate sent a letter to Image stockholders. The 10-page missive urged the election of six independent board members "to replace Image's current directors, whom we believe are entrenched, conflicted, and not acting in your best interests." The letter pointed to the company's poor performance and noted Lions Gate's two offers in the last 13 months to buy Image for $4 per share. The highly volatile stock closed on Sept. 21 at $3.53.


In response, Image sent a letter supporting the re-election of its seven current board members.


"Lions Gate is a hostile corporate raider, attempting to take control of your company without raising its inadequate bid," wrote Chairman Martin Greenwald. "It appears from Lions Gate's recent statements, filings and overall actions that its desire may be to keep Image's share price from increasing in the hopes that Lions Gate's inadequate $4 offer will be accepted."


Finally, in a Sept. 19 filing with the Security & Exchange Commission, Lions Gate denied trying to suppress Image's stock price. Since Lions Gate owns 18.8 percent of Image's equity (4 million shares), it would be counterproductive for Lions Gate to try to lower the price. Instead, the filing claimed that Lions Gate's buyout offer had propped up the stock.


Both Lions Gate and Image distribute niche films. Their proxy battle will end on Oct. 6 when Image shareholders vote to determine the board.


"The outcome is still uncertain," wrote Michael Kelman, an analyst with Pennsylvania-based Susquehanna Financial Group, on Sept. 12. "With the uncertainty surrounding the upcoming shareholders' meeting and the headline risk of Lions Gate's prolonged hostile takeover attempt, we would remain on the sidelines until this situation has been resolved."


Kelman maintains a neutral rating on the stock.


"Angry Harvest" is a German film about a farmer during World War II who hides a Jewish woman from the Nazis. When he falls in love with her, a game of cat-and-mouse ensues with deadly consequences. As a corporation, it seems that Image's life indeed imitates its art.

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