Lions Gate wins New York court battle

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U.S. billionaire Carl Icahn has been dealt a blow by a New York court in his effort to install his supporters on the board of Vancouver-based Lions Gate the film and TV studio he has been trying to take over for 10 months.

Lions Gate, the producer of the Mad Men TV series and the Saw horror film franchise, said Thursday that the New York State Supreme Court had thrown out Mr. Icahn's attempt to secure a injunction ahead of a critical shareholder vote next week.

The injunction would have stopped Lions Gate board member Mark Rachesky from voting shares he acquired in a controversial debt-for-equity swap in July that diluted Mr. Icahn's holdings in the company.

In an interview with the Los Angeles Times this week, Mr. Icahn – who owns 33 per cent of Lions Gate – said that without the injunction it would be "almost impossible" for him to win his proxy battle.

The court victory for Lions Gate came hours after North America's most influential proxy advisory firm, Institutional Shareholder Services Inc. (ISS) gave Mr. Icahn a boost in his bid to take over Lions Gate, endorsing three of his nominees for the company's board.

The report by Maryland-based ISS is sharply critical of Lions Gate, which conducts most of its business from Santa Monica, Calif., for its losses and for what it calls a "bunker mentality" on the part of its board as it has battled Mr. Icahn.

The report singles out the debt-equity swap with Mr. Rachesky in July that diluted Lions Gate's stock, which Mr. Icahn also unsuccessfully challenged in a British Columbia court. (He is appealing that decision.)

"In the course of the past 10 months, this board may have achieved what no other board has managed in at least four decades: make Carl Icahn look like a victim," the ISS report said.

But the report falls short of a complete endorsement of Mr. Icahn. It only advises shareholders to vote for three of his five proposed directors at Tuesday's critical annual general meeting, among them Canadian TV and film producer Jay Firestone.

ISS also endorses for re-election Lions Gate's current vice-chairman, Michael Burns, who has taken the lead fighting Mr. Icahn's bid.

ISS said it does not believe Mr. Icahn deserves five of the board's 12 seats, as this would be one shy of control and Mr. Icahn "has a hostile tender offer outstanding which a majority of shareholder

Lions Gate pointed out that another proxy advisory firm, Glass Lewis, rejected Mr. Icahn's slate. A third advisory firm, Egan Jones, supports all five of Mr. Icahn's candidates, according to a statement from Mr. Icahn.