The studio issued a brief statement late Friday afternoon confirming the news that the lenders had backed management’s reorganization plan. One which they say “will dramatically reduce its debt load and put the Company in a strong position to execute its business strategy,”
But the plan that has been approved has been altered significantly from that which was proposed three weeks ago. Several sources close to the unfolding drama said. Carl Icahn, who holds over 10% of MGM’s debt, backed a revised reorganization that guarantees him a seat on the MGM board, removes Spyglass library from the deal and significantly reduced the Spyglass stake from the 5% level.
It’s expected that the storied studio- a mere shadow of it’s former self and currently saddled with $4 billion of debts- will file for bankruptcy with some immediacy. It is expected that this process will take up to 30 days to complete, after which Spyglass principles Gary Barber and Roger Birnbaum will take control of an MGM that will produce a slimmer slate of films, instead focussing it’s operations on Home Entertainment for Television Networks.
MGM’s seventh forebearance on debt payments was due to expire Friday but approval of the reorganization plan by the debtors eliminates that obligation.
This may not be the end of the doubt though. Since Carl Icahn’s the largest Lionsgate shareholder with 33%, speculation’s likely to emerge that the it’s likely that billionaire takeover artist will continue to push for an MGM-Lionsgate combination.
What is clear though out of this is that the new MGM will be a debt-free operation that will put much greater emphasis on developing programming — scripted and reality — for cable TV.
It’s been a tough year for MGM, who currently hold the rights to the JAMES BOND franchise and half of THE HOBBIT .The studio was put up for sale a year ago but failed to draw bids that were high enough to satisfy the creditors, including a $1.5 billion offer from Time Warner…
