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Lions Gate Fight Grows Uglier

September 29, 2006|From Reuters

Image Entertainment Inc. accused Lions Gate Entertainment Corp. of fraud in its proxy fight with Image in a letter to the Securities and Exchange Commission made public Thursday.

Lions Gate launched a bid to replace six of Chatsworth-based Image's seven directors after the company's board failed to present buyout offers from Lions Gate to its shareholders.

With a 19% stake, Lions Gate, based in North Vancouver, Canada, is Image's second-largest shareholder. Image is an independent distributor of specialty DVD and CD titles including comedy and concerts.

Image's annual shareholder meeting is Oct. 10.

Lions Gate spokesman Peter Wilkes said the company's vision "is to put in place a board that will focus on increasing shareholder value rather than entrenching themselves and senior management."

In its letter to the SEC, dated Tuesday, Image accuses Lions Gate of including false and misleading statements and omissions in its securities filings to persuade shareholders to vote for its slate of directors.

Image claims that Lions Gate, which also owns a DVD distribution business, was using the proxy solicitation process to injure Image as a competitor.

Wilkes said the letter's allegations "are spurious and without merit."

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