Lions Gate Chairman Rachesky Selling 10 Million Shares

Lions Gate Entertainment Corp. said its largest shareholder, Chairman Mark Rachesky’s MHR Fund Management, is selling almost a fifth of its stake in the independent film studio, a sale of about $337 million in stock.

Lions Gate, the studio behind “The Hunger Games” pictures, said Rachesky will sell 10 million shares in a underwritten offering. The company isn’t selling any stock and won’t receive any proceeds, according to a statement Tuesday.

Rachesky, 56, has profited handsomely from Lions Gate, with the stock rising more than fivefold in the past five years. A former Carl Icahn protégé, he has owned a stake since 2004 and backed the Santa Monica, California-based studio in fighting a hostile bid by Icahn in 2010. He became co-chairman of Lions Gate in 2011, and is now non-executive chairman.

Underwriter J.P. Morgan Securities LLC was granted an option to purchase an additional 1.5 million shares. If Rachesky sells the maximum, he will continue to hold almost 40 million Lions Gate shares and remain its largest investor, with at least 27 percent.

Lions Gate fell 3.2 percent to $32.60 in extended trading after the announcement. The stock fell 0.7 percent to $33.68 at the close in New York.

Rachesky is part of a group seeking to buy the Atlanta Hawks basketball team, the Atlanta Journal-Constitution reported on April 3.

Two Negatives

In February, Lions Gate increased its shares outstanding to 145.5 million with a stock-swap transaction that gave Lions Gate a 4.5 percent stake in billionaire John Malone’s Starz LLC.

The studio on Tuesday said adjusted earnings before interest taxes, depreciation and amortization were tracking towards lower end of its previous guidance of $1.2 billion to $1.3 billion over the three fiscal years ending in March 2017. Analysts cited the underperformance of some recent films.

“We view both as negative: The guidance for obvious reasons and the secondary not so much of the size of the stake, which we view as manageable, but rather that the secondary signals an inability to sell the stake to a strategic buyer,” wrote Benjamin Mogil, an analyst at Stifel Nicolaus & Co., in a research note. He rates the stock a buy.

‘Furious 7’ Speeds to a Record April Debut of $143.6 Million

Actor Vin Diesel stars in "Furious 7." Photographer: Scott Garfield/Universal Studios via Bloomberg

 “Furious 7” raced off the line in its box-office debut, setting a record for a movie opening in April.

The seventh film in the franchise from Comcast Corp.’s Universal Pictures collected $143.6 million in U.S. and Canadian theaters, according to Rentrak Corp. It’s the ninth-biggest weekend debut in box office history, according to preliminary figures provided by Rentrak. It was the only new wide release of the weekend.

Led by Vin Diesel and featuring the late Paul Walker, “Furious 7” is the rare tentpole in Hollywood that doesn’t rely on a superhero to carry the film. Despite a larger budget than the previous six in the car-chase action series, the latest installment is forecast to be the most profitable. It registered the biggest opening of the franchise, the biggest of any film in 2015, and beat the April record set last year by Walt Disney Co.’s “Captain America: The Winter Soldier.”

“Home,” the animated family picture featuring the voices of Rihanna, Jennifer Lopez and Steve Martin, fell to second place in its second weekend in theaters. After a better than expected debut, it collected $27.4 million over the weekend for Dreamworks Animation SKG Inc. and the film’s distributor Twentieth Century Fox, the film unit of 21st Century Fox Inc.

Jurassic’ Backer Legendary Said Seeking Up to $700 Million

Legendary Entertainment will release “Jurassic World,” a new sequel to the 1993 Steven Spielberg film, with its current distribution partner, Comcast Corp.’s Universal Pictures, in June. Source: Getty Images

Legendary Entertainment, the independent Hollywood studio backing “Jurassic World,” is in talks to borrow as much as $700 million to make films in a financing led by JPMorgan Chase & Co. and Bank of America Corp., according to people involved in the discussions.

The studio, led by film producer Thomas Tull, started out seeking to replace an almost $600 million credit facility led by the same two banks that matures in 2016, said the people, who asked not to be named because the negotiations are private. The amount may increase to $700 million because of strong demand, the people said.

Legendary, which raised $250 million in equity from Softbank Corp. in October, once worked with Warner Bros. on hits such as “The Dark Knight.” Tull broke away in 2013 and has expanded in television while making big bets on his own films, including “Pacific Rim” and “Godzilla.” The studio will release “Jurassic World,” a new sequel to the 1993 Steven Spielberg film, with its current distribution partner, Comcast Corp.’s Universal Pictures, in June.

Legendary is taking advantage of growing interest in the entertainment industry from investors seeking yield in a low-rate environment for loans. Many banks retreated from the market after the credit crisis several years ago.

The Los Angeles-based studio’s two releases so far this year, “Seventh Son” and “Blackhat,” disappointed at the box office. “Straight Outta Compton” lands in theaters in August.

‘Interstellar,’ ‘Godzilla’

Last year Legendary backed hits including Paramount Pictures’ “Interstellar,” which generated almost $675 million at the global box office. “Godzilla,” released by Warner Bros., rang up $528 million in ticket sales. A sequel is scheduled for 2018.

Melissa Zukerman, an outside spokeswoman for Legendary Entertainment, declined to comment, as did spokespeople from JPMorgan and Bank of America.

Tokyo-based Softbank, led by founder Masayoshi Son, can increase its investment in stages to as much as $1 billion by 2018. The deal last year valued Legendary at more than $3 billion, people familiar with the matter said then.

The agreement gives Softbank films and TV shows for networks it controls, and the companies formed a venture to develop online and mobile services in India and China.