Rumor values MGM at $3 billion

Is Kirk Kerkorian looking to buy the company?

The third time must have been more charmed than anybody realized, if Kirk's really tempted to buy MGM a fourth time.

Yes, that's right. Rumors circulated Tuesday among entertainment bankers that Kirk Kerkorian had floated a $3 billion offer to MGM.

Skepticism was high that such an offer -- if even true -- would go anywhere. But the most intriguing aspect of the speculation was the notion MGM currently carries a valuation of just $3 billion.

A banking consortium led by Sony bought the studio in 2004 in a deal valued at $5 billion at the time. But Kerkorian's purported $3 billion offer roughly equates to the value of the studio implied in recent trading activity in MGM debt instruments, banking-community insiders noted.

MGM chairman and CEO Harry Sloan this month signed a new three-year deal to run the studio. But though he recently unveiled a $500 million line of credit for film production at sister banner United Artists, Sloan continues to battle industry perceptions that the Lion is strapped for cash.

Well-placed sources indicate MGM is sufficiently capitalized to fund film chief Mary Parent's ambitious new slate of film productions and other studio operations for at least another year. But after that, most believe, the studio likely will need to turn to new equity investors to maintain equilibrium.

Those kicking tires recently include Reliance Big Entertainment -- yes, the same RBE getting ready to hand Steven Spielberg $1 billion. But the Mumbai-based film group and its advisers at the UBS investment bank took a pass on an MGM investment, choosing instead to focus on other Hollywood opportunities including a big stake in a Spielberg-resurrected DreamWorks.
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