In an apparent response to Carl Icahn's latest hostile takeover attempt, Lions Gate Entertainment Corp. late Tuesday swapped $100 million worth of convertible debt into common shares, slightly diluting the percentage of his stake.

Lions Gate said the move was part of a strategy to reduce its debt load, but the timing suggested the action may have been a swipe at its largest shareholder. The billionaire activist investor earlier in the day declared an end to his short truce with the Santa Monica studio and launched another tender offer at a lower price.

The company’s debt conversion, which resulted in the issuance of 16.2 million new shares, took place at $6.20 per share, a 2.8 per cent premium to the company's Monday closing price. The company, whose corporate headquarters are in Vancouver, British Columbia, now has about 135 million shares outstanding, which dilutes Icahn's stake from 37.9 percent to 33.5 percent.

An affiliate of Mark Rachesky's MHR Fund Management, Lions Gate’s second largest shareholder, appears to have acquired at least some of the new shares, increasing its stake in the company from 19.6 percent to nearly 23 percent, according to Bloomberg News. Rachesky generally has been supportive of management over the years.

Icahn, in his new tender offer that expires Aug. 25, lowered his offer price by 50 cents to $6.50 per share. Before the debt conversion, the offer valued the company at less than $768 million.

Icahn, who opposes Lions Gate’s ongoing interest in acquiring the struggling Metro-Goldwyn-Mayer Inc. studio, conditioned his offer on the company avoiding any major transaction before he takes over. He plans to nominate his own slate of directors to replace the company's board.

Lions Gate shares, which hovered near Icahn’s earlier bid price that expired at the end of June, have since fallen, closing at $6.03 on Monday. After Tuesday’s developments, they closed up 50 cents, or 8 percent, to $6.53 on the New York Stock Exchange.

The company said its board would study Ichan’s new offer, but earlier this month approved a revised shareholder rights program designed as a "poison pill" to discourage unfriendly takeovers. The plan is triggered if a single shareholder accumulates 38 percent or more of outstanding common shares.

The plan, different from the company’s move today, would allow other shareholders to buy extra shares at a discount, which would dilute the stake of the hostile buyer. Icahn was successful in getting Canadian courts to block an earlier plan.

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