Creditors give studio until Sept. 15
The MGM saga will get another two months to play out.
The Lion received a sixth extension Wednesday on debt payments from its 140 creditors, who have given the beleaguered studio a forebearance that will expire Sept. 15.
The fifth extension would have expired at the end of Wednesday. The announcement was the studio’s first public comment since mid-May, when it obtained the fifth extension.
Move came a day after a committee repping the creditors met with Lionsgate execs, who presented a merger plan for reorganizing MGM, according to sources familiar with the situation. Neither companiy commented on the meeting, but it’s believed that Lionsgate wants the surviving entity to retain the MGM name and be headed by Lionsgate toppers Jon Feltheimer and Michael Burns.
The MGM debtholders, however, would still have to be persuaded to accept a debt-for-equity restructuring.
Under such a scenario, the merged MGM-Lionsgate would have a library of 7,000 titles; rights to the James Bond franchise and half the “Hobbit” films; a feature production-distribution arm handling over a dozen releases a year including the Tyler Perry franchise; a TV production operation that includes “Mad Men” and “Weeds”; parts of TV Guide and the Epix pay TV platform and a TV syndication arm.
MGM’s hobbled by $3.7 billion in debt and put itself up for sale in November. In addition to meeting with Lionsgate — which is in the midst of a 10-day truce in its battle with its largest shareolder Carl Icahn — MGM has also met with execs from Spyglass and Summit in recent weeks to discuss scenarios under which MGM would reorganize and receive production funds.
Time Warner may also still be interested, as it made a formal offer in March believed to be in the $1.5 billion range.
MGM’s announcement didn’t address specifics about bidders. It contained the usual acknowlegment of gratitude to the creditors for their support. “The lenders took this action in support of the company’s ongoing efforts to evaluate longterm strategic alternatives to maximize value for its stakeholders,” it said. “MGM appreciates the continued support of its lender group throughout this process.”