TW, Lionsgate advance in MGM bidding

Second round of due diligence has begun

Round two of due diligence has begun in the process to find a buyer for MGM, with a couple Hollywood studios figuring among the half-dozen advancing bidders.

MGM consultant Moelis & Co., which is supervising the process, won't call it an auction as some in the mix are still talking simple debt restructuring. But a group of almost 150 MGM lenders are pressing for a change in ownership as a means of dealing with $3.7 billion in MGM debt.

Six of the 10 companies making offers in a first round of non-binding bidding have been invited to participate in the second round. Those invited to the new round of bidding include Warner Bros.-parent Time Warner, Lionsgate and three other companies.

Fox-parent News Corp. -- whose first-round participation was limited to a $1.5 billion valuation wrapped into an offer to help restructure MGM debt -- has not yet been invited to the new round of bidding.

Those participating recently resumed financial due diligence, featuring more detailed studio data than previously was made available. Due diligence is expected to last a couple weeks before additional new offers emerge from the process.

MGM's current ownership group includes Providence Equity, TPG Capital, Sony, Comcast, DLJ Merchant and Quadrangle.

JPMorgan Chase is leading a steering committee representing the studio's lenders group.
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