SCHEDULE: MHR Fund Management Adjusts Lionsgate Stake

MHR Fund Management LLC and affiliated entities have amended their Schedule 13D filing to reflect a series of transactions involving the transfer of Lionsgate Studios Corp. common shares.

Summary

• This filing is an amendment (Amendment No. 2) to a Schedule 13D originally filed on May 8, 2025, concerning the beneficial ownership of Lionsgate Studios Corp. common shares.
• The amendment details a series of transactions, collectively referred to as the 'CV Transaction,' that occurred on July 8, 2026.
• Through the CV Transaction, MHR Institutional Partners II LP, MHR Institutional Partners IIA LP, and MHR Institutional Partners III LP (collectively, the 'Participating MHR Funds') transferred common shares to newly formed continuation vehicles.
• These continuation vehicles, MHR LION Holdco A, MHR LION SubHoldco A, MHR LION Holdco B, and MHR LION SubHoldco B, are managed by Fund Management and controlled by MHR Sun GP, which is in turn controlled by The Rachesky Revocable Trust.
• The transfers were made in respect of indirect interests in common shares held by limited partners who elected to receive cash or roll over their interests.
• As of the filing date, MHR Fund Management LLC beneficially owns 37,648,498 common shares, representing 13.0% of the outstanding shares.
• Dr. Mark H. Rachesky beneficially owns 37,910,710 common shares, also representing 13.0% of the outstanding shares, including directly held shares and those held through various affiliated entities.
• The filing notes that these ownership figures do not include shares held by Liberty Global Parties or Liberty77 Parties, which are subject to separate voting agreements.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral; it details a complex internal restructuring and adjustment of beneficial ownership rather than a new investment, sale, or significant strategic shift that would inherently be positive or negative.

Positives

• The CV Transaction involved the restructuring of holdings, potentially offering liquidity options to limited partners.
• New vehicles have been established to manage transferred shares, indicating ongoing strategic management of the investment.
• Dr. Rachesky maintains significant beneficial ownership (13.0%), suggesting continued commitment to the investment.

Negatives

• The transaction involved the transfer of shares from previously held funds, indicating a shift in direct beneficial ownership structure.
• Limited partners who elected the cash option received cash in lieu of their indirect interests in Lionsgate shares.
• The filing details complex inter-entity transfers, which can sometimes obscure the ultimate beneficial ownership and control.

Risks

• The 'Minimum Liquidity Threshold' must be satisfied within three months after the fifth anniversary of the CV Transaction closing, or MHR Sun GP must use reasonable best efforts to satisfy it. If not met, the Lead Investor Representative has rights to force the sale of shares held by MHR LION SubHoldco A and MHR LION SubHoldco B.
• If a material amount of unrealized investments remain in MHR LION SubHoldco A or MHR LION SubHoldco B six months after the expiration of their terms (five years from closing, extendable to seven), the Lead Investor Representative may have the right to appoint a liquidator or effect a distribution in kind, or potentially assume control of these entities.
• The Side Letter includes provisions that could lead to the Lead Investor Representative identifying an independent director candidate for the Issuer's board, subject to approval, which could influence board composition and decision-making.
• Restrictions on Sun Feeder's ability to sell shares in registered offerings are outlined, with a potential limitation of more than 120 days without prior written consent from the Lead Investor Representative.

Future Outlook

The filing indicates that the Reporting Persons intend to review their holdings in Lionsgate Studios Corp. on a continuing basis and may explore various alternatives. They reserve the right to acquire or dispose of additional securities and to formulate other plans or proposals regarding the Issuer.

Management Comments

• The Reporting Persons intend to review their holdings in the Issuer on a continuing basis and as part of this ongoing review to evaluate various alternatives that are or may become available with respect to the Issuer and its securities.
• The Reporting Persons reserve the right to and may, from time to time and at any time, in their sole discretion, formulate and implement other purposes, plans or proposals regarding the Issuer or any of its subsidiaries or affiliates or any of their equity or debt securities or instruments that relate to or would result in the occurrence of any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D as the Reporting Persons may deem advisable in their sole discretion.

Industry Context

StockSavvy.ai notes that this Schedule 13D amendment reflects a significant restructuring of investment holdings by MHR Fund Management and its affiliates in Lionsgate Studios Corp. The complexity of the transactions, involving multiple entities and continuation vehicles, is typical in private equity and hedge fund operations seeking to manage investor liquidity and optimize portfolio performance. The inclusion of specific liquidity thresholds and potential distribution rights highlights the active management and exit-oriented strategies often employed by such funds.

Comparison to Industry Standards

• The structure of the CV Transaction, involving the transfer of assets to continuation vehicles and offering liquidity options to existing investors, is a recognized strategy in the private equity industry for extending fund life or providing liquidity without a full sale of underlying assets.
• The involvement of multiple affiliated entities (e.g., MHR Institutional Partners III LP, MHR Sun GP LLC, MHR Fund Management LLC) in managing and holding shares is standard practice for large investment funds to segregate different investment strategies, investor classes, or tax jurisdictions.
• The inclusion of detailed provisions regarding 'Minimum Liquidity Threshold' and rights for a 'Lead Investor Representative' to influence liquidity and potential asset sales is consistent with terms found in limited partnership agreements for sophisticated investment funds, particularly those involving co-investments or feeder funds.

Corporate Governance

Related Party Transactions

• The CV Transaction itself involves transfers between various MHR-affiliated entities and continuation vehicles, controlled by Dr. Rachesky and Fund Management.
• The Side Letter and the amended and restated limited partnership agreements for MHR LION SubHoldco A and MHR LION SubHoldco B outline specific rights and obligations between MHR entities (MHR Sun GP, MHR LION SubHoldco A/B) and the Lead Investor (represented by RenWave Kore LLC and MHR Sun Holdings LP).

Stakeholder Impact

• Shareholders of Lionsgate Studios Corp.: The restructuring by MHR Fund Management and its affiliates may indirectly affect the market for Lionsgate shares depending on future actions of the new entities and the Lead Investor.
• Limited Partners of Participating MHR Funds: These investors were offered options to receive cash or roll over their interests, impacting their direct exposure to Lionsgate shares and other investments.
• Lead Investor: The Lead Investor has secured specific rights related to board representation, liquidity thresholds, and potential asset sales or distributions, indicating a significant influence on the future of the investment.

Next Steps

• MHR Sun GP is required to use reasonable best efforts to satisfy the 'Minimum Liquidity Threshold' if it is not met by three months after the fifth anniversary of the CV Transaction closing.
• If the Minimum Liquidity Threshold is not satisfied by the specified deadline, the Lead Investor Representative has rights to cause MHR LION SubHoldco A and MHR LION SubHoldco B to take actions to satisfy it, including selling shares.
• If a material amount of unrealized investments remain in MHR LION SubHoldco A or MHR LION SubHoldco B six months after the expiration of their terms, the Lead Investor Representative may have rights related to liquidation or distribution.
• Fund Management has agreed to designate an independent director identified by the Lead Investor Representative, subject to approval, starting 90 days before the first shareholder meeting at which directors are elected following the CV Transaction closing, provided certain conditions are met.

Key Dates

Keywords

Schedule 13D, Lionsgate Studios Corp., MHR Fund Management LLC, Beneficial Ownership, Common Shares, CV Transaction, Mark H. Rachesky, SEC Filing, Investment Management, Shareholder Agreements