MGM moving auction process forward

Lion to begin second round of bidding next week

MGM’s forging ahead with the auction of its assets despite indications of a less than enthusiastic response so far.

The Lion announced Monday it will begin the second round of the process next week. It didn’t disclose the identities of the bidders or the price range of the nonbinding offers. But people close to the situation indicated that none of the offers came in above the unofficial target of $2 billion.

MGM has received numerous indications of interest,” MGM said in a statement. “The company

continues to evaluate those bids and is having discussions with the interested parties. MGM expects the next phase of this process to begin next week.”

Time Warner, India’s Reliance Entertainment, Lionsgate, AT&T, Liberty Media, Summit Entertainment and News Corp. are among the most likely bidders. More than a dozen companies have signed nondisclosure agreements allowing them to review MGM’s internal financials.

MGM’s assets include the 4,000-title library, the right to make new James Bond and Pink Panther movies, the Lion logo, the United Artists operations and half ownership of the two “Hobbit” movies.

The company put itself up for sale on Nov. 13 with investment bankers Moelis & Co handling the auction. MGM’s carrying a $3.7 billion debt load and has relesed only a single film — a remake of “Fame” — in the past year.

The 140 MGM debtholders have agreed to forgive debt payments through Jan. 31, so it’s likely they will grant another extension to allow the auction process to play out further. MGM’s 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.

The Lion was taken private in 2005 by a consortium led by Sony, Providence Equity Partners, Texas Pacific Group and Comcast, with the group paying $2.85 billion and assuming $2 billion in debt as part of the purchase.

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