You will be redirected back to your article in seconds

MGM backs Spyglass plan

But company must consider Lionsgate, other offers

Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors.

At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer as well as any others that may be made.

MGM’s largest debtholders have until Oct. 22 to vote on the bankruptcy plan, which calls for Spyglass toppers Gary Barber and Roger Birnbaum to manage a merged Spyglass-MGM operation following a pre-packaged bankruptcy.

On Wednesday, Lionsgate started dialing up its campaign, two days after unveiling its offer in which debtholders would emerge with 55% of the combined company. Lenders received the studio’s official solicitations last week to back the Spyglass plan.

MGM continued to have no comment Wednesday on how the new bid would be handled. But a source familiar with the thinking of some of the creditors said they haven’t ruled out considering a new cash offer from Time Warner or other bidders — should one emerge. MGM debtholders spurned an offer of $1.5 billion from Time Warner in the spring.

“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.”

The Spyglass plan calls for Barber and Birnbaum to manage a merged operation once MGM’s pre-packaged bankruptcy’s approved in court. That process is expected to take about 30 days once the filing’s made.

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

Lionsgate is offering about $1.8 billion in stock and debt, leaving MGM debtholders with a 55% stake in the new 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 it distributes its own movies and the combined studio would not have to rely on an outside distrib.

More Film

  • Screen Media Buys Horror Film 'Luz'

    Screen Media Buys Horror Film 'Luz' for 2019 Release (EXCLUSIVE)

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

  • Bob Bakish: Viacom Is 'Very Well-Positioned'

    Bob Bakish Says Viacom Is 'Very Well-Positioned' in a World of Media Mergers

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

  • Egyptian director A.B Shawky poses during

    'Yomeddine' Director A.B. Shawky to Receive Variety MENA Talent of the Year Award

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

  • 'Capernaum' Selected by Lebanon for Foreign-Language

    Nadine Labaki's 'Capernaum' Selected by Lebanon for Foreign-Language Oscar Race

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

  • San Sebastian: Media Luna Takes J.A.

    San Sebastian: Media Luna Acquires J.A. Bayona-Exec Produced 'I Hate New York' (EXCLUSIVE)

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

  • San Sebastian: Watch New Directors’ ‘Neon

    Watch the Trailer for San Sebastian New Directors Feature ‘Neon Heart’ (EXCLUSIVE)

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

  • 'King of Thieves' Review: True-Life Jewel

    Film Review: 'King of Thieves'

    Despite Monday’s surprise merger offer from Lionsgate Entertainment, MGM will proceed with a scheduled vote among its creditors on a rival bid that would leave Spyglass Entertainment in charge, according to a source close to the creditors. At the same time, the source said, the creditors have a fiduciary responsibility to consider the Lions-gate offer […]

More From Our Brands

Access exclusive content