‘BURNED’ BY MARTS
The stock slide of Hollywood mini-major Lionsgate Entertainment has turned into a bloodbath for the studio’s vice chairman, Michael Burns.
Burns was forced to sell off 25 percent of his stake in the company on Oct. 10 after he was socked by a margin call from Merrill Lynch that forced him to liquidate 672,000 shares valued at $4.04 million, according to Securities and Exchange Commission filings.
His shares – pledged as collateral on a personal real estate loan – were sold at between $6.38 and $5.75 a share, filings show.
Prior to the sale, Burns had options and restricted stock totaling 2.67 million shares, including new options gained when he inked a new employment contract on Sept. 22. The move coincided with the stock hitting a three-year low of $5.59 on Oct. 10. Lionsgate shares, which closed down 6 cents yesterday at $7.31, is off more than 22 percent over the last month.
Activist-investor Carl Icahn has been busily buying up shares in the company over the last three weeks as Lionsgate shares have fallen.
Since the beginning of the month, Icahn has spent over $86 million increasing his stake from 4.29 million shares, or 3.7 percent of Lionsgate’s shares, to 10.8 million shares, or 9.2 percent, according to SEC filings disclosed earlier this week.
Still to be seen is whether Icahn, a holder of Lionsgate for the last three years, wants to spur some sort of shakeup at the studio, including a possible merger or sale, in a bid to energize the stock. Icahn has said he sees Liongate stock as undervalued and holds occasional talks with Lionsgate brass, but no specifics of the conversations have been disclosed.
The company – currently distributing the Oliver Stone-directed presidential biopic “W.” – announced last week that Burns and Lionsgate Co-chairman/CEO Jon Feltheimer have both extended their deals with the studio. Burns’ new deal runs through 2011, while Feltheimer has been extended through 2014.
Burns is the latest media maven to feel the sting of a margin call in response to the tightening credit crunch. National Amusements, the holding company for Sumner Redstone’s controlling interests in Viacom and CBS, sold $233 million of its shares in Viacom and CBS to meet debt-covenant agreements.