MGM Borrows Additional $100 Million (Report)
Although it is virtually debt free and already has a $665 million line of credit, Metro Goldwyn Mayer has renegotiated its term loan with two Wall Street banks to increase the amount from $200 million to $300 million, noting only that the money will be used for "general corporate purposes."
The news was reported on LCD News, a subscription data website for Wall Street. MGM, which has been revived in the past three years under CEO Gary Barber, declined comment on the report to The Hollywood Reporter.
The move could mean more movies or TV productions, or it could set the stage for an acquisition. The new agreement with J.P. Morgan and Goldman Sachs also extends the term of the loan by one year to six years and sets the interest rate at 5.125 percent, which is lower than the prior range of 5.5 to 5.75 percent, so it does lower the cost to borrow.
The movie and TV company, which is actually called MGM Holdings, does not release movies itself but works through distributors. The most recent release is 22 Jump Street, which is being distributed by Sony Pictures Entertainment (which also co-financed).
22 Jump Street opened very strong, grossing just over $57 million in its first weekend, which is the second biggest opening ever for an R-rated comedy behind The Hangover Part II. It is also a 57 percent increase over the $36 million opening of 21 Jump Street in 2012.
This summer MGM is involved in two movies: Hercules, starring Dwayne "The Rock" Johnson, which Paramount releases July 25; and If I Stay, a co-production with Warner Bros. and New Line Cinema opening Aug. 22.
MGM is also in line for another bonanza when Warner Bros. and New Line open the third and final Hobbit movie, The Hobbit: The Battle of the Five Armies, on Dec. 17.
MGM is not public, it does have thinly traded stock that is moved in blocks on the private market. The stock price is currently $78.25 per share, up from $54 a year ago.