UPDATE 2-Lions Gate scores court victory in Icahn battle

* Judge denies Icahn motion to bar Rachesky voting stake

* Glass Lewis urges against Icahn’s Lions Gate slate

* ISS supports 3 of Icahn’s nominees
(Adds court rulings, analysts, context, comments)

By Sue Zeidler

LOS ANGELES, Dec 9 (BestGrowthStock) – Lions Gate Entertainment
(LGF.N: ) won a key court victory against hostile bidder Carl
Icahn while investor advisory firms gave a mixed assessment of
the proxy battle, with one urging full support of Icahn’s
slate, ahead of the company’s annual meeting next week.

Three influential shareholder investor firms, Institutional
Shareholder Services, Glass Lewis & Co, and Egan-Jones, took
the studio’s financial performance to task, but only one fully
supported Icahn’s five board nominees ahead of Lions Gate’s
annual meeting on Tuesday in Los Angeles.

Then late on Thursday, Lions Gate scored a major win when a
New York judge denied a motion by Icahn, the company’s largest
shareholder, seeking an injunction to block Lions Gate’s second
largest shareholder Mark Rachesky, from voting shares he got in
a debt-for-equity swap in July.

Icahn was not immediately available for comment.

Icahn, who has made a hostile $7.50-a-share takeover offer
for Lions Gate, had sought to unwind the transaction that
effectively diluted his stake from 38 percent to 33 percent.

Investors said the ruling would make it difficult for Icahn
to put his five nominees on Lions Gate’s board at the company’s
annual meeting on Tuesday.

“If the the transaction that the company did with Rachesky
holds, there is no way he could win. My guess at this point is
that Icahn’s slate will be defeated because the insiders hold
too big a block of the company,” said Richard Dorfman, managing
director of investment firm Richard Alan Inc, which owns shares
in Lions Gate.

Nevertheless, some analysts said Icahn may still have scored
some points with institutional investors due to the reports
issued by proxy advisory firms, which took the company’s
financial performance to task.

Proxy advisory Glass Lewis & Co urged shareholders to
reject Icahn’s slate, saying the billionaire lacked a clear
plan to revive the company, but cited the company’s cumulative
net loss of about $274.6 million for the five fiscal years
ended March 31, 2010 and also gave it a poor grade for
executive compensation, saying its paid more than its peers but
performed moderately worse than its peers.

Egan-Jones urged full support for Icahn’s slate, while ISS
supported three of Icahn’s five nominees, saying its
performance over the past five years underscores doubts about
its pace toward profitability.

“I think it will be close. It would be a minor victory for
Icahn if he gets three of his nominees elected, although three
out of 12 board members would not result in a major game
changer for the company,” said David Bank, analyst with RBC
Capital Markets.

(Reporting by Susan Zeidler; Editing by Derek Caney,
Bernard Orr)

UPDATE 2-Lions Gate scores court victory in Icahn battle