Feltheimer says proposal has 'tremendous' value in SEC filing

Lionsgate’s dialing up a campaign to persuade MGM’s debtholders to choose its merger proposal rather than a rival reorganization plan that would leave Spyglass Entertainment toppers in charge.

Lionsgate touted its proposal Wednesday in a filing with the Securities and Exchange Commission, under which debtholders would emerge with 55% of the combined company.

MGM had no comment on the Lionsgate filing.

“This is a unique, once in a lifetime opportunity to create a dynamic, forward-looking studio that unlocks tremendous potential value for Lionsgate’s shareholders and MGM’s various stakeholders,” said Lionsgate Co-Chairman and CEO Jon Feltheimer and Vice Chairman Michael Burns. “A Lionsgate merger with MGM is a natural fit that would bring together two of the most powerful libraries in the world, create significant cost savings, consolidate our mutual global channel operations and generate significant incremental revenue and cash flow. It would create a combined entity with enough scale to leverage all of our distribution platforms worldwide.”

Lionsgate also noted its three largest shareholders — Carl Icahn, Mark Rachesky’s MHR Fund Management and Gordon Crawford’s Capital Research Global Investors — support the merger proposal.

More than 100 MGM debtholders face a Oct. 22 deadline to vote on the reorganization proposal that would leave Spyglass toppers Gary Barber and Roger Birnbaum in charge and wipe out the debt-ridden studio’s existing equity with a pre-packaged bankruptcy.

Lionsgate is offering about $1.8 billion in stock and debt that would give MGM debtholders a 55% stake in the company. Some MGM debtholders would end up with $400 million in new debt.

Lionsgate’s proposed merger would combine two of Hollywood’s biggest libraries and a significant presence in film and TV production and distribution. Such a combination could make the Lionsgate bid particularly attractive, since Lionsgate distributes its own movies and the combined studio would not have to rely on an outside distributor.

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