MGM watch: Studio gets another debt extension

For James Bond fans who don’t like Metro-Goldwyn-Mayer Inc., July 14 wasn’t a good day. The studio, coping with $3.7 billion of debt got another extension where it doesn’t have to make payments. MGM put out this news release indicating the company would live to die another day:

MGM said today its lenders agreed to extend the forbearance period and
therefore will not seek remedies in connection with the nonpayment of interest
and principal due on the company’s bank debt, including the revolving credit
facility, until September 15, 2010.

That’s the sixth extension granted by lenders and would indicate the fate of the studio, which owns half of the 007 film franchise, won’t be settled until nearly the end of summer. As things stand now, no more work on Bond 23 will occur until MGM’s situation is resolved.

However, this week, there were other developments. Bloomberg.com, in a story by Ronald Grover and Michael White THAT YOU CAN VIEW BY CLICKING HERE, reported that Lions Gate Entertainment is sniffing around at acquiring MGM.

Lions Gate Entertainment Corp., the independent film and TV producer, has approached creditors of ailing Metro-Goldwyn-Mayer Inc. to help shape a plan to acquire the studio, two people with knowledge of the situation said.

Lions Gate Vice Chairman Michael Burns has been meeting in New York with investors who hold some of MGM’s $3.7 billion debt, according to the people, who requested anonymity because the discussions are private.

Lions Gate has its own issues. The company has been feuding with one shareholder, Carl Icahn. The Bloomberg story adds this detail:

Any agreement to buy Los Angeles-based MGM, which won another loan reprieve from creditors today, would have to be approved by Carl Icahn, Lions Gate’s largest shareholder. He took a 10-day break from efforts to gain control of Vancouver- based Lions Gate’s board so the company could make a case for certain acquisitions. That standstill agreement expires on July 19. Debt-hobbled MGM is co-owner of the James Bond franchise.

Last month, the Wall Street Journal reported reported that Spyglass Entertainment may be a leading contender to gain control of MGM. Meanwhile, Time Warner Inc. earlier this year submitted a bid and said as recently as May that it was still interested at the right price.

The bottom line: MGM’s future, and James Bond’s, are still unsettled.