NEW
YORK, May 14, 2024 /CNW/ - On May 14, 2024, MHR Fund Management LLC
("Fund Management") filed an amended early warning
report in accordance with Section 5.2(2)(b) of National Instrument
62-104 – Take-Over Bids and Issuer Bids (the "Early
Warning Report") for Lions Gate Entertainment Corp. ("Lions
Gate"). The report was filed in conjunction with Fund
Management's Schedule 13D filing with the U.S. Securities and
Exchange Commission as of the date hereof, a copy of which is
available on EDGAR at www.sec.gov.
The Early Warning Report updates information disclosed in
previous early warning reports filed by the Acquiror (as defined
herein) on November 16, 2015,
July 4, 2016, October 3, 2019 and November 22, 2022 (collectively, the "Prior
Reports").
Item 1 Security and Reporting Issuer
1.1 State the designation of securities to which this
report relates and the name and address of the head office of the
issuer of the securities.
This report relates to Class A voting shares, no
par value ("Class A Voting Shares") and Class B
non-voting shares, no par value ("Class B Non-Voting
Shares") of Lions Gate Entertainment Corp.
(the "Company"). The Company's head office is located
at:
Lions Gate Entertainment Corp.
250 Howe Street, 20th Floor
Vancouver, B.C. V6C 3R8,
Canada
1.2 State the name of the market in which the
transaction or other occurrence that triggered the requirement to
file this report took place.
Not applicable.
Item 2 Identity of the Acquiror
2.1 State the name and address of
the acquiror.
MHR Fund Management LLC (the
"Acquiror")
1345 Avenue of the Americas, 42nd Floor
New York, New York 10105,
USA
The Acquiror is a Delaware limited liability company.
2.2 State the date of the transaction or other
occurrence that triggered the requirement to file this report and
briefly describe the transaction or other occurrence.
This report is being filed in accordance with
Section 5.2(2)(b) of National Instrument 62-104 – Take-Over Bids
and Issuer Bids to update previous disclosure made in response
to Item 5 and Item 6 of the Prior Reports to reflect a subsequent
change to the stated purpose of the Acquiror's investment
intentions and the Acquiror's subsequent entrance into the LG
Studios Investor Rights Agreement (as defined below) and Amendment
to the Voting and Standstill Agreement (as defined below), all as
further described in this report in Item 5 and 6,
respectively.
This report is being filed in conjunction with
the Acquiror's Schedule 13D filing with the U.S. Securities and
Exchange Commission as of the date hereof (the "Schedule
13D"), a copy of which will be available on EDGAR at
www.sec.gov.
2.3 State the names of any joint actors.
The Acquiror is an affiliate of and has an
investment management agreement with MHR Capital Partners Master
Account LP, MHR Capital Partners (100) LP, MHR Institutional
Partners II LP, MHR Institutional Partners IIA LP, MHR
Institutional Partners III LP and MHR Institutional Partners IV LP
(collectively, the "MHR Funds"). MHR Holdings LLC ("MHR
Holdings") is the managing member of the Acquiror. MHR Advisors
LLC ("Advisors") is the general partner of each of MHR
Capital Partners Master Account LP and MHR Capital Partners (100)
LP. MHR Institutional Advisors II LLC ("Institutional Advisors
II") is the general partner of each of MHR Institutional
Partners II LP and MHR Institutional Partners IIA LP. MHR
Institutional Advisors III LLC ("Institutional Advisors
III") is the general partner of Institutional Partners III LP.
MHR Institutional Advisors IV LLC ("Institutional Advisors
IV") is the general partner of Institutional Partners IV LP.
MHRC LLC ("MHRC") is the managing member of the Advisors.
MHRC II LLC ("MHRC II") is the managing member of
Institutional Advisors II. Mark H.
Rachesky, M.D. ("Dr. Rachesky") is the managing
member of MHR Holdings, MHRC, MHRC II, Institutional Advisors III
and Institutional Advisors IV. As a result, each of Dr. Rachesky,
the Acquiror, MHR Holdings, the MHR Funds, Advisors, Institutional
Advisors II, Institutional Advisors III, Institutional Advisors IV,
MHRC and MHRC II (collectively, the "Reporting Persons") may
be considered to be joint actors in connection with the disclosure
set out herein.
Item 3 Interest in Securities of the Reporting Issuer
3.1 State the designation and number or principal
amount of securities acquired or disposed of that triggered the
requirement to file the report and the change in the acquiror's
securityholding percentage in the class of securities.
Not applicable.
3.2 State whether the acquiror acquired or disposed
ownership of, or acquired or ceased to have control over,
the securities that triggered the requirement to file the report.
Not applicable.
3.3 If the transaction involved
a securities lending
arrangement, state that fact.
Not applicable.
3.4 State the designation and number or principal
amount of securities and the acquiror's securityholding percentage
in the class of securities, immediately before and after the
transaction or other occurrence that triggered the requirement to
file this report.
See Item 3.5(a).
3.5 State the designation and number or principal
amount of securities and the acquiror's securityholding percentage
in the class of securities referred to in Item 3.4 over
which
(a) the acquiror, either alone or together with any joint
actors, has ownership and control,
The Acquiror beneficially owns, through the MHR Funds,
20,127,660 Class A Voting Shares of the Company and 15,105,522
Class B Non-Voting Shares. In addition, Dr. Rachesky directly owns
80,764 Class A Voting Shares and 84,266 Class B Non-Voting
Shares.
Collectively, the Acquiror, through the MHR Funds, and Dr.
Rachesky own 20,208,424 Class A Voting Shares, representing
approximately 24.18% of the issued and outstanding Class A Voting
Shares, and 15,189,788 Class B Non-Voting Shares, representing
approximately 10.02% of the issued and outstanding Class B
Non-Voting Shares, in each case, calculated on a non-diluted
basis.
In addition, Dr. Rachesky owns 10,712 restricted share units,
payable upon vesting in an equal number of Class A Voting Shares,
and 11,383 restricted share units, payable upon vesting in an equal
number of Class B Non-Voting Shares.
(b) the acquiror, either alone or together with any joint
actors, has ownership but control is held by persons or companies
other than the acquiror or any joint actor, and
Not applicable.
(c) the acquiror, either alone or together with any joint
actors, has exclusive or shared control but does not have
ownership.
Not applicable.
3.6 If the acquiror or any of its joint actors has an
interest in, or right or obligation associated with, a related
financial instrument involving a security of the class of
securities in respect of which disclosure is required under this
item, describe the material terms of the related financial
instrument and its impact on the acquiror's
securityholdings.
Not applicable.
3.7 If the acquiror or any of its joint actors is a
party to a securities lending arrangement involving a security of
the class of securities in respect of which disclosure is required
under this item, describe the material terms of the arrangement
including the duration of the arrangement, the number or principal
amount of securities involved and any right to recall the
securities or identical securities that have been transferred or
lent under the arrangement.
State if the securities lending arrangement is subject to the
exception provided in section 5.7 of NI 62- 104.
Not applicable.
3.8 If the acquiror or any of its joint actors is a
party to an agreement, arrangement or understanding that has the
effect of altering, directly or indirectly, the acquiror's economic
exposure to the security of the class of securities to which this
report relates, describe the material terms of the agreement,
arrangement or understanding.
See Item 3.5(a).
Item 4 Consideration Paid
4.1 State the value, in Canadian dollars, of any
consideration paid or received per security and
in total.
Not applicable.
4.2 In the case of a transaction or other occurrence
that did not take place on a stock exchange or other market that
represents a published market for the securities, including an
issuance from treasury, disclose the nature and value, in Canadian
dollars, of the consideration paid or received by the
acquiror.
Not applicable.
4.3 If the securities were acquired or disposed of
other than by purchase or sale, describe the method of acquisition
or disposition.
Not applicable.
Item 5 Purpose of the Transaction
State the purpose or purposes of the acquiror
and any joint actors for the acquisition or disposition of
securities of the reporting issuer. Describe any plans or future
intentions which the acquiror and any joint actors may have which
relate to or would result in any of the following:
-
-
- the acquisition of additional securities of the reporting
issuer, or the disposition of securities of the
reporting issuer;
- a corporate transaction, such as a merger, reorganization or
liquidation, involving the reporting issuer or any of its
subsidiaries;
- a sale or transfer of a material amount of the assets of the
reporting issuer or any of its subsidiaries;
- a change in the board of directors or management of the
reporting issuer, including any plans or intentions to change the
number or term of directors or to fill any existing vacancy on the
board;
- a material change in the present capitalization or dividend
policy of the reporting issuer;
- a material change in the reporting issuer's business or
corporate structure;
- a change in the reporting issuer's charter, bylaws or
similar instruments or another action which might impede the
acquisition of control of the reporting issuer by any person or
company;
- a class of securities of the reporting issuer
being delisted from, or ceasing to be authorized to be quoted
on, a marketplace;
- the issuer ceasing to be a reporting issuer in any
jurisdiction of Canada;
- a solicitation of proxies from securityholders;
- an action similar to any of those enumerated above.
The Class A Voting Shares and Class B Non-Voting Shares
reflected in this report were acquired for investment purposes. The
Reporting Persons intend to review their holdings in the Company on
a continuing basis and as part of this ongoing review, evaluate
various alternatives that are or may become available with respect
to the Company and its securities. The Reporting Persons may from
time to time and at any time (in accordance with any trading policy
of the Company or its subsidiaries and affiliates that may then be
applicable to the Reporting Persons), in their sole discretion,
acquire or cause to be acquired, additional equity or debt
securities or other instruments of the Company, its subsidiaries or
affiliates, or dispose, or cause to be disposed, such equity or
debt securities or instruments, in any amount that the Reporting
Persons may determine in their sole discretion, through public or
private transactions or otherwise.
In addition to the foregoing, certain of the Reporting Persons
are pursuing various alternatives with respect to the Company's
securities in order to create liquidity opportunities for limited
partners of certain of the Reporting Persons. Among the
alternatives being pursued, such Reporting Persons are considering
forming a continuation vehicle or other special purpose vehicle
that would continue to be controlled by certain of the Reporting
Persons that would enable existing limited partners to achieve
liquidity or continue their indirect investment in the Company,
making an in-kind distribution to certain limited partners of
certain of such Reporting Persons, or effecting a public or private
transaction. The timing, and whether and how these alternatives can
be effected, will depend on transaction and market terms and
conditions, as well as legal, regulatory and other factors.
The Reporting Persons reserve the right to and may, from time to
time and at any time, in their sole discretion, formulate and
implement other purposes, plans or proposals regarding the Company
or any of its subsidiaries or affiliates or any of their equity or
debt securities as the Reporting Persons may deem advisable in
their sole discretion. The information set forth in this Item 5 is
subject to change from time to time and at any time, and there can
be no assurances that any of the Reporting Persons will or will not
take, or cause to be taken, any of the actions described above or
any similar actions.
Item 6 Agreements, Arrangements, Commitments or
Understandings With Respect to Securities of the Reporting
Issuer
Describe the material terms of any
agreements, arrangements, commitments or understandings between the
acquiror and a joint actor and among those persons and any person
with respect to securities of the class of securities to which this
report relates, including but not limited to the transfer or the
voting of any of the securities, finder's fees, joint ventures,
loan or option arrangements, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies. Include
such information for any of the securities that are pledged or
otherwise subject to a contingency, the occurrence of which would
give another person voting power or investment power over such
securities, except that disclosure of standard default and similar
provisions contained in loan agreements need not
be included.
See Item 6 in each of the Prior Reports filed on
November 16, 2015, July 4, 2016 and October
3, 2019, respectively, for a brief description of the
material terms of the MHR Voting Agreement, the Investor Rights
Agreement and the Voting and Standstill Agreement, including all
amendments thereto, each as defined and further described in the
Prior Reports. In addition, on May 13,
2024, the Acquiror entered into the LG Studios Investor
Rights Agreement and the Amendment to the Voting and Standstill
Agreement, as summarized below.
LG Studios Investor Rights Agreement
Reference is made to that certain business
combination agreement dated as of December
22, 2023 (as amended, the "Business Combination
Agreement") as further described by the Company on Schedule 14A
dated December 22, 2023, a copy of
which is available under the Company's profile on EDGAR at
www.sec.gov.
In connection with the closing of the
transactions contemplated by the Business Combination Agreement, on
May 13, 2024, Lionsgate Studios
Corp., a corporation organized under the laws of British Columbia (the "LG Studios"),
the Acquiror and certain of its affiliates, Discovery Lightning
Investments Ltd. ("Discovery") and a certain affiliate
thereof, and Liberty Global Incorporated Limited ("Liberty")
and a certain affiliate thereof, entered into an investor rights
agreement (the "LG Studios Investor Rights Agreement") that
duplicates the provisions of the Investor Rights Agreement (as
defined in the Prior Report filed July 4,
2016) with respect to LG Studios, including board
designation and preemptive rights to the Acquiror. Under the LG
Studios Investor Rights Agreement, the initial designees to the
board of directors of LG Studios (the "LG Studios Board") of
the Acquiror are Dr. Rachesky, Emily
Fine and John D. Harkey, Jr.
The initial designee to the LG Studios Board of Liberty is
Michael T. Fries and the initial
designee to the LG Studios Board of Discovery is Priya Dogra.
The foregoing description of the LG Studio
Investor Rights Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the LG
Studio Investor Rights Agreement, which is attached as Exhibit 99.1
to and incorporated by reference in the Schedule 13D.
Voting and Standstill Agreement Amendment
In connection with the closing of the
transactions contemplated by the Business Combination Agreement, on
May 13, 2024, the Company, LG
Studios, the Acquiror and certain of its affiliates, Liberty and a
certain affiliate thereof, and Discovery and a certain affiliate
thereof, entered into an amendment to a voting and standstill
agreement between each of the foregoing parties (other than LG
Studios) (the "Amendment to the Voting and Standstill
Agreement") to add LG Studios as a party thereto such that
the provisions of the original voting and standstill agreement
apply to LG Studios as if it were the Company. Additionally, under
the Amendment to the Voting and Standstill Agreement, the Company
agreed to vote the common shares it holds in LG Studios in favor of
designees of the Acquiror, Liberty and Discovery to the board of LG
Studios.
The foregoing description of the Amendment to
the Voting and Standstill Agreement does not purport to be complete
and is qualified in its entirety by reference to the full text
thereof, which is attached as Exhibit 99.2 to and incorporated by
reference in the Schedule 13D.
Item 7 Change in material fact
If applicable, describe any change in a
material fact set out in a previous report filed by the acquiror
under the early warning requirements or Part 4 in respect of the
reporting issuer's securities.
See Item 2.2.
Item 8 Exemption
If the acquiror relies on an exemption from
requirements in securities legislation applicable to formal bids
for the transaction, state the exemption being relied on and
describe the facts supporting that reliance.
Not applicable.
SOURCE MHR Fund Management LLC