LIONS GATE ENTERTAINMENT CORP /CN/

Item 1A. Risk Factors.

TOthere w than as set forth below, there were no other material changes to the risk factors previously reported in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

The separation of the Companys motion picture and television studio operations, from its other businesses, is subject to various risks and uncertainties, and may not be completed in accordance with the expected plans or anticipated timeline, or at all, and will involve significant time and expense, which could disrupt or adversely affect the Companys business.

On October 14, 2024, the Company filed a joint proxy statement/prospectus on Form S-4 with the SEC relating to the implementation of a plan of arrangement that will result in the separation of the businesses of Lionsgate Studios Corp., of which the Company owns approximately 87.8% and which encompasses the Companys motion picture and television studio operations, from its other businesses, including the STARZ-branded premium subscription platform (the Proposed Separation). The separation into two separate, publicly traded companies is complex in nature, and unanticipated developments or changes, including changes in the law, the macroeconomic environment, competitive conditions, regulatory approvals or clearances, the uncertainty of the financial markets and challenges in executing the Proposed Separation, could delay or prevent the completion of the Proposed Separation, or cause the Proposed Separation to occur on terms or conditions that are different or less favorable than expected. The process of completing the proposed Separation has been and is expected to continue to be time-consuming and involves significant costs and expenses. The costs of the Proposed Separation may be significantly higher than what the Company currently anticipates and may not yield a discernible benefit if the Proposed Separation is not completed or is not well executed, or the expected benefits of the Proposed Separation is not realized. Executing the Proposed Separation will also require significant amounts of the Companys managements time and effort, which may divert managements attention from operating and growing the Companys businesses. In addition, if the Proposed Separation is abandoned, not completed, or delayed or if the expected benefits of the Separation are not realized, there may be a negative impact on the market price of the Companys common shares.

The Proposed Separation may result in litigation and/or regulatory inquiries and investigations, which could harm the Companys business, financial condition and operating results and could divert management attention.

Additionally, the Proposed Separation may result in litigation and/or regulatory inquiries and investigations, which could harm the Companys financial condition and operating results and could divert management attention. In the past, securities class action litigation and/or shareholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Proposed Separation. Any litigation or investigation relating to the Proposed Separation could result in substantial costs and divert managements attention from other business concerns, which could adversely affect the Companys business and cash resources and the ultimate value of its common shares.

Purported noteholders have instituted suit against the Company claiming that it breached the indenture governing Lions Gate Capital Holdings LLCs 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.

On August 27, 2024, purported holders of the Companys 5.500% senior notes due 2029 (the 5.500% Notes) filed a complaint against the Company in New York State court asserting claims for declaratory judgment and breach of the implied covenant of good faith and fair dealing based on a May 2024 transaction in which the Company exchanged approximately $390 million in aggregate principal amount of 5.500% Notes for new 5.500% exchange notes due 2029 and entered into

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Supplemental Indenture No. 10 to the indenture governing the 5.500% Notes (the Indenture). The main basis for these claims is that Supplemental Indenture No. 10 allegedly implicated certain provisions of the Indenture that require consent of each affected holder for certain types of waivers, amendments, and supplements to the Indenture. The relief sought includes a request for a declaration that Supplemental Indenture No. 10 and the associated exchange transaction are null and void, as well as for a permanent injunction against the Proposed Separation transactions going forward to the extent they have not already taken place. On September 13, 2024, another purported holder sought to intervene as a plaintiff in the same suit asserting nearly identical claims, which intervention was granted on October 11, 2024.

Although the Company believes that these allegations are without merit, there can be no assurance that the plaintiffs will not be successful in obtaining relief sought in their complaints. If they are successful in obtaining a declaratory judgment, they may also issue the trustee of the 5.500% Notes a notice of default and seek accelerated payments for amounts due under the 5.500% Notes. These actions may result in an outcome that could have a material adverse impact on the Companys business, operations and financial conditions as well as their stakeholders, as any such actions could require payments on the 5.500% Notes earlier than expected. In addition, if plaintiffs obtain an injunction against moving forward with the Proposed Separation, the Proposed Separation, to the extent not yet completed, may need to be abandoned. Even if the Company is successful in defending against such claims, it may expend significant management time and attention and funds to defend against such claims.