The Securities and Exchange Commission levied a $7.5 million fine against movie studio Lions Gate Entertainment Corp. for failing to properly disclose its role in a complex debt-equity swap that helped it fend off a hostile takeover bid from Carl Icahn in 2010.
The SEC said Thursday that Lions Gate had agreed to pay the fine and admitted wrongdoing.
A Lions Gate spokesman declined to comment.
The company had already accounted for the cost of the fine in its earnings report for its third quarter, which ended in December.
The commission said that the company orchestrated the move to put about 9 percent of company shares in the hands of Mark Rachesky, a director friendly to management. The agency said such a large sale of stock would have required the approval of other shareholders according to New York Stock Exchange rules.
The move followed a bid by Icahn in July 2010 to take over the company for $6.50 per share.
Following a midnight board meeting, the company swapped $100 million in convertible bonds owned by Kornitzer Capital Management Inc. for similar bonds with a later maturity. Kornitzer then sold the bonds to Rachesky, Icahn's former chief investment adviser, for $105.7 million. Rachesky immediately converted them into common shares at $6.20 apiece, boosting his stake to 28.9 percent, compared to less than 20 percent before the swap. Icahn's stake fell from 37.9 percent to about 33 percent because the new issuance of converted shares boosted the overall share count.
Lions Gate portrayed the move in a news release at the time as a way for it to reduce debt. It did not say it was part of a takeover defense.
Icahn contested the move in various venues, including the Canadian province of British Columbia, where Lions Gate's Canadian headquarters is based, but he failed to have the transaction annulled. Icahn later sold off his stake in Lions Gate and abandoned his takeover attempt.
Andrew Ceresney, director of the SEC's enforcement division, said the investigation was continuing but didn't elaborate.
Lions Gate shares fell $1.06, or 3.2 percent, to $32.20 Thursday. They are up 39 percent over the past year.
Ubisoft shares jump following reports of Tencent, Guillemot family considering buyout
Shares of Ubisoft jumped more than 30% Friday, following reports that Tencent and the Guillemot family are considering a buyout of the video game maker.
Bloomberg news reported that Tencent and Guillemot family — minority stakeholders in Ubisoft — have been discussing ways to stabilize the company after it lost more than half its market value this year. Shares surged 33.5% to about $15.57 Friday, according to FactSet.
Ubisoft declined to comment. Tencent did not immediately respond to a request for comment.
France-based Ubisoft is the publisher behind the well-known franchise "Assassin's Creed." Ubisoft's shares fell last month to their lowest point in more than a decade after its latest title "Star Wars Outlaws" underperformed and the company announced that it would delay the latest "Assassin's Creed" game.
Yves Guillemot, Ubisoft's CEO, said in a statement last week that the company's "second quarter performance fell short of our expectations."
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