Carl Icahn threatened Friday to increase his holdings in Lionsgate Entertainment (LGF) beyond the approximately 19% stake he now owns, pointing out that such a move could potentially trigger a bankruptcy filing by the company, which he is trying to acquire in a hostile takeover, according to a Reuters report.
In a letter to Lionsgate's board, Icahn stated that bumping up his stake by a few percentage points could push the movie studio into default with some of its creditors. That, in turn, could lead to a voluntary bankruptcy filing by Lionsgate, which would wipe out investors' equity - including his.
The gamesmanship comes as Icahn seeks to acquire the company at $7 a share and offer it a bridge loan: The company has rejected both his bid and the loan offer. The report notes that analysts expect Lionsgate to obtain a waiver from its creditors, allowing it to avoid bankruptcy, if Icahn pushes past the trigger point.
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