For over a year now, MGM has been in major financial crisis, with its debt payments constantly having to be put back, and nearly everything from it development slate to distrbution having to be put on hold (several already shot movies have been stuck in limbo while the studio has tried to sort itself out). It’s seen The Hobbit majorly delayed and the next James Bond film put on ice as a new buyer was despersately sought for the struggling studio.
However no-one wanted to pay even close to the asking price and certainly not enough to cover the $4 billion in debt. However more recently there’s been talk of a merger rather than an outright acquisition.
Both Liongate and Spyglass have expressed interest, and now it’s been announced the MGM board and creditors have approved a deal with the latter. They issued a statement saying, ‘Metro-Goldwyn-Mayer Inc. (‘MGM’) today announced that the secured lenders voting in the Company’s solicitation process have overwhelmingly approved its proposed plan of reorganization (‘Plan’). MGM will now move expeditiously to implement that Plan, which will dramatically reduce its debt load and put the Company in a strong position to execute its business strategy. MGM is appreciative of the lenders’ support.’
The deal will put Spyglass chiefs Roger Birnbaum and Gary Barber in charge of a slimmed down MGM, which will become a studio only, rather than handling its own marketing and distribution. It also includes a pre-packaged ‘bankruptcy’, which converts the $4 billion in debt into about 95% equity in the company, with Spyglass getting most of the rest.
The hope is that once approved by the courts (although there are rumblings MGM debtholder Carl Icahn may still fight for the Lionsgate merger – a company of which he’s the largest shareholder), it’ll allow the studio to get their production slate back up and running (The Hobbit is going ahead irrespective of what happens here). This should allow Bond to get going again, although there’s still uncertainty about how this will work, and whether Sony, which has co-produced the last two flicks, will now basically take over, or if MGM will be looking for a new partner. Either way, it should make it much easier to get the movie made.