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Everything you need to know about the MGM bankruptcy

06-Nov-2010 • Bond News

Storied movie studio Metro-Goldwyn-Mayer filed for bankruptcy protection this week, under a crushing weight of debt and with too few hit movies to pay back what it owed, reports the Wall Street Journal.

Corporate bankruptcies are a dime a dozen these days, but it’s worth taking a deeper dive into MGM, an 86-year-old company with the roaring lion logo that is responsible for “Gone with the Wind” and the “James Bond” film franchise.

(Read MGM’s court filing on how it got into this mess here. Also check out previous items on MGM’s courtroom drama and the role of “MacGyver” in the bankruptcy.)

A look at MGM’s bankruptcy by the numbers:

$5 Billion
The amount an investor consortium including Sony, Comcast Corp., Providence Equity Partners and TPG paid for MGM in a 2005 leveraged buyout, beating out a rival bid from Time Warner.

$5 Billion
Amount of secured debt MGM’s creditors are owed. They won’t get a penny back, and instead will take over ownership of the movie studio.

$1.25 billion
The high end of MGM’s estimated gross liquidation value of June 30.

Percentage decline in cash flow in the last two years from MGM’s “library,” or sales of its movies on DVD, to pay-TV channels like HBO and other sources of income besides theatre ticket sales. In the year ended March 31, 2008, the library churned out $557 million in cash. For the 12 months ended this March, the figure had shriveled to $228 million, largely because MGM’s sales of DVDs and other home video products dropped 83% over the two years. The company expects cash flow to climb again as it restocks its movie making hits, up to an annual cash flow of $455 million by the end of 2015.

Number of directors on MGM’s new board. Two for Spyglass Entertainment founders Gary Barber and Roger Birnbaum, who will manage MGM under the proposed bankruptcy restructuring plan; one each for investor Carl Icahn and hedge funds Anchorage Advisors and Highland Capital; the other four are reserved for independent directors still to be named. The role of board chairman will be played by a “lead director” chosen from the independent directors.

Consultant retained by MGM’s new board to advise on initial overhead cuts and report findings and recommendations to the board.

$150 million
The MGM movie production budget that will trigger approval from a majority of MGM directors, if the film isn’t included with “reasonable specificity” in the studio’s annual budget.

$300 million+
Estimated production costs to make “Avatar”

$1.6 billion
Total inflation-adjusted gross from MGM’s most popular theatrical film of all time, the 71-year-old “Gone with the Wind,” according to Box Office Mojo.

1 *
Number of MGM movies among the top 100 movies of 2010, ranked by dollar value of tickets sold, according to Box Office Mojo. Time Warner’s Warner Brothers has 18 movies on the top-100 list.

(* Yes, it’s “Hot Tub Time Machine,” at #50. with a U.S. box office take of about $50 million.)

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