Sahara India Pariwar eyes MGM buy

Movie studio may go for over $2 billion, reports WSJ source

MGM's long-running financial soap opera has taken an exotic turn.

Indian conglomerate Sahara India Pariwar is in talks to acquire movie studio the Lion for more than $2 billion, according to an unnamed Wall Street Journal source.

Spyglass Entertainment co-toppers Gary Barber and Roger Birnbaum have been in an extended review of MGM financial data after signing a letter of intent to run the studio as co-chairmen and -CEOs, with Spyglass in line for an almost 5% stake in the Lion. That tentative deal is part of a prospective bankruptcy-reorganization plan that would see almost $4 billion in MGM debt turned into slivers of studio ownership to be spread among more than 100 lenders.

But there has always been the prospect of another twist in the tortured path to financial stability for the recently struggling Lion. Warner Bros. parent Time Warner topped bidding in a failed MGM auction this year with a $1.5 billion offer, and some have suggested the conglomerate could return with a sweetened bid at some point prior to the studio's filing for bankruptcy reorg.

Private equity firms Anchorage, Highland, Davidson Kempner and Solis are the biggest debtholders after accumulating at least 35% of the Lion's publicly traded debt. Approval of an MGM sale or a prepackaged bankruptcy filing would be needed from 51% of all lenders and a group representing two-thirds of the total amount owed.

Terms of Spyglass' arrangement with MGM stipulate payment of a $4.5 million "breakup fee" should the parties fail to close on the deal. But it ism't clear when the breakup clause becomes binding.

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.
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