SEC Comment Letter for LIONS GATE ENTERTAINMENT (STRZ) — Aug 30, 2010
LIONS GATE ENTERTAINMENT CORP /CN/ (STRZ, LGF-A, LGF-B) (CIK 0000929351)
Date: Aug. 30, 2010 · CIK: 0000929351 · Accession: 0000000000-10-049907
AI Filing Summary & Sentiment
Referenced dates: July 22, 2010, July 9, 2010
Letter
August 30, 2010 Via Fax & U.S. Mail Mr. Jon Feltheimer Chief Executive Officer Lions Gate Entertainment Corp. 1055 West Hastings Street Suite 2200 Vancouver, British Columbia V6E 2E9
Re: Lions Gate Entertainment Corp. Form 10-K for the year ended March 31, 2010 Filed June 1, 2010 File No. 1-14880
Dear Mr. Feltheimer:
We have reviewed your letter dated July 22, 2010 in response to our letter dated July 9, 2010 and your subsequent periodic filings, and have the following additional comment. Please respond to confirm that such comment will be co mplied with in future filings, or, if deemed inappropriate, advise the staff of your reason. Your response should be submitted in electronic form, under the label “corresp” with a copy to the staff. Please respond within ten (10) business days.
Note 22. Subsequent Events
1. We note from the disclosure included in Note 22 that on July 20, 2010, the Company entered into a refinancing agreement to exchange approximately $36.0 million in aggregate principal amount of the February 2005 3.625% Notes and approximately $63.7 million in aggregate principal amount of the October 2004 2.9375 Notes for equal principal amounts, respectively of new 3.625% Convertible Subordinated Notes due 2027 and new 2.9375% convertible Senior Subordina ted Notes due 2026. We also note that the new notes took effect immediat ely and all terms were iden tical to the February 2005 3.625% Notes and the October 2004 2.9375% Notes except that the New Notes had an extended maturity date, extended put rights by two years and were immediately convertible at an in itial conversion rate of 161.2903 co mmon shares of the Company per $1,000 principal amount of the New Notes. We further note that on July 20, 2010, the New Notes were converted into 16,236,305 shar es of the Company. Please tell us and revise the notes to the Company’s financial statements in future filings to explain how the Company accounted for the exchange transact ion and the related c onversion of the new notes issued into shares of the compa ny’s common stock. As it appears that the
Mr. Jon Feltheimer Lions Gate Entertainment Corp. August 30, 2010 Page 2
conversion price of the new notes issued in the exchange transaction had a lower conversion price than the original notes that they replaced, it appears that the transaction should be accounted for as an induced conversion pursuant to the guidance in ASC 470-20-40-26. You may contact Effie Simpson at (202) 551-3346, or the undersigned if you have questions regarding comments on th e financial statements and rela ted matters. Please contact John Stickel at (202) 551-3324 with any other questions.
Sincerely,
Linda Cvrkel Branch Chief
Via Fax: James Keegan, CFO (310) 388-1306
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August 30, 2010 Via Fax & U.S. Mail Mr. Jon Feltheimer Chief Executive Officer Lions Gate Entertainment Corp. 1055 West Hastings Street Suite 2200 Vancouver, British Columbia V6E 2E9 Re: Lions Gate Entertainment Corp. Form 10-K for the year ended March 31, 2010 Filed June 1, 2010 File No. 1-14880 Dear Mr. Feltheimer: We have reviewed your letter dated July 22, 2010 in response to our letter dated July 9, 2010 and your subsequent periodic filings, and have the following additional comment. Please respond to confirm that such comment will be co mplied with in future filings, or, if deemed inappropriate, advise the staff of your reason. Your response should be submitted in electronic form, under the label “corresp” with a copy to the staff. Please respond within ten (10) business days. Note 22. Subsequent Events 1. We note from the disclosure included in Note 22 that on July 20, 2010, the Company entered into a refinancing agreement to exchange approximately $36.0 million in aggregate principal amount of the February 2005 3.625% Notes and approximately $63.7 million in aggregate principal amount of the October 2004 2.9375 Notes for equal principal amounts, respectively of new 3.625% Convertible Subordinated Notes due 2027 and new 2.9375% convertible Senior Subordina ted Notes due 2026. We also note that the new notes took effect immediat ely and all terms were iden tical to the February 2005 3.625% Notes and the October 2004 2.9375% Notes except that the New Notes had an extended maturity date, extended put rights by two years and were immediately convertible at an in itial conversion rate of 161.2903 co mmon shares of the Company per $1,000 principal amount of the New Notes. We further note that on July 20, 2010, the New Notes were converted into 16,236,305 shar es of the Company. Please tell us and revise the notes to the Company’s financial statements in future filings to explain how the Company accounted for the exchange transact ion and the related c onversion of the new notes issued into shares of the compa ny’s common stock. As it appears that the Mr. Jon Feltheimer Lions Gate Entertainment Corp. August 30, 2010 Page 2 conversion price of the new notes issued in the exchange transaction had a lower conversion price than the original notes that they replaced, it appears that the transaction should be accounted for as an induced conversion pursuant to the guidance in ASC 470-20-40-26. You may contact Effie Simpson at (202) 551-3346, or the undersigned if you have questions regarding comments on th e financial statements and rela ted matters. Please contact John Stickel at (202) 551-3324 with any other questions. Sincerely, Linda Cvrkel Branch Chief Via Fax: James Keegan, CFO (310) 388-1306