• by Wayne Friedman , March 26, 2009

Lionsgate Entertainment is letting its shareholders decide what to do about Carl Icahn's move to buy some of the company's debt, saying it has "no opinion" about the corporate raider's move.

Icahn owns 14.3% of Lionsgate stock; he and recently broke off talks with the movie/TV studio. He wanted to seat three of his own members on Lionsgate board and has said in the past that the movie studio has a much undervalued library.

After the talks, Icahn launched a tender offer for some of Lionsgate's convertible debt -- debt which can turn into stock -- which some saw as an attempt by Icahn to eventually accumulate more stock.

But Lionsgate warned in a press release: "There may be greater value for noteholders after 2011 than under the Icahn offer. Under the existing terms of the notes, noteholders have certain rights, beginning on Oct. 15, 2011 and at specified times thereafter, to require Lionsgate to repurchase their notes for 100% of the principal amount plus accrued and unpaid interest."

The company added: "Lionsgate noted that Carl Icahn has not made, nor announced, any intention to make an offer to buy common shares of Lionsgate's parent entity."

Icahn has reportedly been looking to team up with other big Lionsgate investors, who could give him a majority of the voting shares of the company. This includes investor and former Icahn associate Mark Rachesky, who has a 19.7% stake.

If Icahn gets control of Lionsgate's debt, he could amass a stake of over 29%. That control could come at more than twice the price of the company's stock price, which close on Thursday at $5.41 a share, down $0.11 or 2%.