Back in November, I reported that Carl Icahn was "hovering over" Lion's Gate Entertainment, the film and television studio behind "Mad Men" and "Weeds."
A lot has happened since then. In March, Icahn announced an offer for the company notes, willing to pay $0.75 on the dollar for them. Why would anybody take $0.75 on $1.00 face value? If you think there is a one-quarter chance of a default, that's a fair trade. If you think the chance of default is higher than that, you might jump at Icahn's offer.
But why would Icahn offer 75 cents if he things the chance of default is high? Presumably, he sees the stockpiling of notes as a means whereby he can acquire control over Lions Gate, and he believes that if he does get control, he prospect of default will recede and he'll be able to get a dollar for the dollar.
Anyway: Icahn appears not to have gotten the sort of response he presumably desired from that offer. Bloomberg News has quoted a lawyer of his saying "there wasn't much" response. Bloomberg's story also tells us: "Lions Gate reached an agreement last month with two unidentified bondholders to swap $66.6 million of the 3.63 percent notes for new bonds that can be converted into more common shares. In return, one agreed not to tender $24 million face amount of 2024 debt to Icahn."
So, Carl: If you want control of Lions gate, why not get it the old fashioned way? Make a bid for their equity!
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