MGM granted debt extension, more time to seek buyer
MGM's received another month and a half of relief from payments on its debt, with its lenders agreeing to skip receiving payments until mid-May - reports Variety
MGM made the announcement Wednesday, when its latest extension on debt payment would have run out. It's the fourth time since September that lenders to the beleaguered studio have made such an agreement, aimed at giving CEO Stephen Cooper enough time to restructure the storied studio.
The announcement also said that MGM won't have make a payment that was due next week on its revolving credit line.
MGM put itself up for sale in November, drawing a trio of binding offers two weeks ago. Lionsgate bailed out of the bidding last week, leaving only Time Warner and Len Blavatnik's Access Industries in the running.
Wednesday's announcement didn't address what steps MGM could take next â whether it will select a buyer, seek another round of bidding or recapitalize itself, probably through a pre-packaged bankruptcy.
"MGM said today its lenders agreed to extend the forbearance period and therefore will not seek remedies in connection with the nonpayment of interest and principal due on the company's bank debt, including the revolving credit facility, through May 14, 2010," the statement said. "The lenders took this action in support of the company's ongoing efforts to strengthen its financial position, and MGM appreciates their continued support throughout the process."
MGM debtholders are said to be split into two camps â one that wants to accept the best offer; and the other that wants to prolong the process in hopes of keeping the studio alive. The remaining binding offers for MGM are believed to be in the $1.5 billion range, far below the $2 billion threshold price sought by MGM and its debtholders.
The first round of bidding generated six non-binding offers, including bids from Liberty Media Corp. and Elliot Management. But declining DVD revenues have cooled interest in acquiring the 86-year-old studio.
MGM carries debts of $3.7 billion. MGM's assets include its name and logo, the United Artists operations, a library with more than 4,000 titles, the James Bond franchise, half of "The Hobbit" franchise and a barebones film and TV operation.
Discuss this news here...