Beleaguered MGM has received two more months of exemption from debt payments so the studio can work out a sale or restructuring.
The Lion announced in a statement that its lenders had agreed to extend the “forbearance” period on interest payments on its debts until March 31.
The move was not a surprise. Extension is the third that’s been granted in recent months by the lenders as MGM — staggered by a $3.7 billion debt load — attempts to find a buyer. The two-month exemption was announced Friday in advance of Sunday’s expiration of the latest extension.
“The lenders took this action in support of the company’s efforts to strengthen its financial position and to facilitate the company’s ongoing process of exploring strategic alternatives, which include continuing to operate as a standalone entity and evaluating a potential sale of the company,” the studio said in the statement.
Announcement was the first from MGM since Jan. 18, when it said it would begin the second round of its official process of seeking a buyer. The studio indicated that it’s nowhere near concluding those efforts, which include allowing qualified bidders the opportunity to go over MGM’s internal financials.
“MGM also reiterated today that it has begun the second phase of the M&A process and is conducting due diligence with select parties who have submitted bids,” the statement concluded. “This phase of the process is expected to run for the next several weeks.”
MGM hasn’t disclosed the identities of the bidders or the price range of the nonbinding offers. But people close to the situation have indicated that the bids have come in under $2 billion. Time Warner, India’s Reliance Entertainment, Lionsgate, AT&T, Liberty Media, Summit Entertainment and News Corp. are among the most likely bidders.
The company put itself up for sale on Nov. 13. MGM has released only a single film — a remake of “Fame” — in the past year. Its next film, “Hot Tub Time Machine,” opens March 26.
The 140 MGM debtholders had been expected to forgive debt payments into the spring to allow the auction process to play out further. MGM is also facing repayment of its $250 million revolving credit line in early April and a $1 billion payment on its $3.7 billion debt in July 2011.