MGM bids expected all weekend
But executives insist that no outcome is guaranteedThe studio auction that’s not an auction has a bidding deadline that’s not a deadline.
Moelis & Co. is MGM’s consultant on what the studio describes as an attempt to identify companies interested in acquiring part or all of the Century City studio. Executives won’t call the process an auction and insist that no outcome is guaranteed, but nearly 150 lenders bearing $3.7 billion in Lion debt are pushing for a turnover in ownership.
No bids were expected before Friday, the deadline on a first round of nonbinding offers for the studio, and Moelis has signaled that bidding would be allowed to continue through the holiday weekend. When the business week begins Tuesday, studio executives and their consultants will cull through offers received to determine how to proceed.
MGM issued a statement Friday afternoon saying that it was "in the process of receiving indications of interest from potential bidders. Once the company has completed reviewing the initial bids, it will begin the second phase of its strategic review process."
In the first round, strict nondisclosure rules kept Fox from participating, as studio executives refused to sign off on confidentiality agreements required for access to a virtual data room. Participants in the process include Warner Bros., Lionsgate, AT&T and Summit Entertainment.
Meanwhile, it’s clear that lenders again will have to stretch the Jan. 31 deadline on a $250 million debt payment by the studio.
MGM lenders, led by JPMorgan Chase and advised by Houlihan & Lokey, appear OK with that, provided some number of reasonable first-round bids are received. Nobody expects any offer to top $2 billion, but something well north of $1 billion would be necessary to validate the process.
Debt holders are anxious to see if first-round bids are worth considering or whether a serious overhaul of the bidding process might be required. An even more serious response by disappointed debt holders would see them force the Jan. 31 debt payment, potentially forcing the Lion into bankruptcy court.
Indeed, some in the lenders group fear that MGM CEO Stephen Cooper wants to elicit such lowball bids for the studio that debt holders are forced to allow current owners to fashion a simple debt restructuring rather than relinquish their hold on the Lion.
MGM’s ownership group includes Sony and Comcast as well as Providence Equity, TPG Capital, DLJ Merchant and Quadrangle.