MGM's bright lights turned off
Source: Agencies |
November 5, 2010, Friday
|
Print Edition
Print Edition
HOLLYWOOD studio Metro-Goldwyn-Mayer Inc, the home of James Bond, filed for bankruptcy protection on Wednesday in a plan that had the backing of its lenders and put funding of its half of "The Hobbit" back on track.
The "prepackaged" bankruptcy plan, more than a year in the making, should go quickly. MGM is to restructure and be managed by the co-CEOS of Spyglass Entertainment.
MGM lenders will trade about US$4 billion in debt for stock in the new company, valued at US$2 billion.
Billionaire investor Carl Icahn was involved in the run-up to the filing, first backing a rival takeover attempt by Lions Gate Entertainment Corp, then throwing his weight behind Spyglass last week.
The company said in a statement that "certain immaterial modifications" convinced Icahn, a holder of a significant amount of MGM debt, to back the plan. Debt holders such as Icahn, Anchorage Advisors and Highland Capital Management are now set to take over the studio and equity owners such as Sony Corp and Comcast Corp will have their stakes wiped out.
The changes included allowing Icahn to appoint one member of the nine-member board, on which Spyglass' co-CEOs Gary Barber and Roger Birnbaum would also get one seat each.
The modified deal excludes 15 films from the Spyglass movie library such as "Seabiscuit." As a result, the stake of Spyglass's co-CEOs in MGM will fall from the originally proposed 4.7 percent to significantly less, said a person familiar with the matter, who was not authorized to speak publicly and requested anonymity. Instead, future projects that Spyglass is developing will be included in the merger, the person said.
The "prepackaged" bankruptcy plan, more than a year in the making, should go quickly. MGM is to restructure and be managed by the co-CEOS of Spyglass Entertainment.
MGM lenders will trade about US$4 billion in debt for stock in the new company, valued at US$2 billion.
Billionaire investor Carl Icahn was involved in the run-up to the filing, first backing a rival takeover attempt by Lions Gate Entertainment Corp, then throwing his weight behind Spyglass last week.
The company said in a statement that "certain immaterial modifications" convinced Icahn, a holder of a significant amount of MGM debt, to back the plan. Debt holders such as Icahn, Anchorage Advisors and Highland Capital Management are now set to take over the studio and equity owners such as Sony Corp and Comcast Corp will have their stakes wiped out.
The changes included allowing Icahn to appoint one member of the nine-member board, on which Spyglass' co-CEOs Gary Barber and Roger Birnbaum would also get one seat each.
The modified deal excludes 15 films from the Spyglass movie library such as "Seabiscuit." As a result, the stake of Spyglass's co-CEOs in MGM will fall from the originally proposed 4.7 percent to significantly less, said a person familiar with the matter, who was not authorized to speak publicly and requested anonymity. Instead, future projects that Spyglass is developing will be included in the merger, the person said.
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