MGM receives another loan extension

Lion has until Oct. 29 to pay lenders more than $450 million

The Lion still isn't out of the woods, but MGM has gotten another needed postponement of more than $450 million in debt payments.

As expected, more than 100 holders of almost $4 billion in MGM have agreed to a seventh debt forbearance agreement with the Century City-based studio. The Lion now has until Oct. 29 to pay lenders $250 million in principal and more than $450 million in owed interest.

The previous forbearance agreement was to have expired Wednesday.

But it's likely the payments never will be made, as the struggling Lion is expected to creep into bankruptcy court before that with a plan for turning debt into lender equity. Spyglass Entertainment would come in as an almost 5% stakeholder in MGM as part of the plan, with Spyglass co-toppers Gary Barber and Roger Birnbaum to be installed as co-chairmen and co-CEOs.

The Spyglass duo recently signed a letter of intent to that effect and now are continuing due diligence on MGM financials in an effect to flesh out the studio's new business plan. Lenders eventually must vote to approve the bankruptcy reorganization plan.

MGM thanked lenders on Wednesday for the latest debt forbearance agreement.

"The lenders took this action in support of the company's ongoing efforts to evaluate long-term strategic alternatives to maximize value for its stakeholders," MGM said. "MGM appreciates the continued support of its lender group throughout this process."

Current MGM owners including Providence Equity, TPG Capital, Sony, Comcast, DLJ Merchant and Quadrangle likely would see their equity positions in the studio wiped out in a restructuring.

MGM is being run by an office of the CEO comprised of turnaround specialist Stephen Cooper, CFO Bedi Singh and film topper Mary Parent. All are expected to exit their posts once Barber and Birnbaum are installed.
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