MGM proposes bankruptcy plan

MGM proposes bankruptcy plan

Hollywood studio Metro-Goldwyn-Mayer submitted on Thursday a pre-packaged bankruptcy plan to lenders that aims to reduce $4 million in debt and let Spyglass Entertainment take it over.

The film studio with one of the most well-known logos in Hollywood, has been discussing with investors on how to trim its debt and is now trying to get the votes of lenders for the studio’s reorganization.

MGM’s plan is for lenders to swap $4 billion in debt with 95.3 percent equity after the company exits from Chapter 11 bankruptcy.

The studio’s secured lenders will vote on the plan by October 22, and more than half of them who owns two-thirds of MGM’s debt must approve of the plan before it becomes final.

If the plan goes smoothly as planned, then pending movie projects like “The Hobbit”, a prequel to the “Lord of the Rings” trilogy, would finally begin production.

MGM owns the James Bond and Pink Panther movie franchises among other coveted film rights, but has been saddled with a $2.85 billion debt due to a buyout by private equity firms Providence Equity Partners, DLJ Merchant Banking Group, Quadrangle Group, TPG, Comcast Corp. and Sony Corp.

Under the plan, production outfit Spyglass Entertainment would grab 0.52 percent of MGM in exchange for giving up some of its assets. Cypress Entertainment Group Inc. and Garoge Inc. would team-up with Spyglass to up the stake to 4.17 percent after MGM’s reorganization.

Spyglass would then take control of MGM, with Gary Barber and Roger Birnbaum, co-founders of Spyglass, set to be named chairman and chief executive officer respectively of the new MGM.

Posted by Kade Quinn on Friday October 08 2010, 6:35 AM EST. All trademarks acknowledged. Filed under Entertainment, Featured News. Comments and Trackbacks closed. Follow responses: RSS 2.0