MGM watch: Spyglass chiefs to be named co-CEOs of MGM after bankruptcy filing

Nikki Finke’s Deadline site, IN A STORY BY MIKE FLEMING says the co-heads of Spyglass Entertainment are getting closer to taking charge of Metro-Goldwyn-Mayer Inc., with Spyglass’s top executives to take control of MGM after a “pre-packaged” banrkuptcy. Late in the day, MGM put out a press release that confirmed the story.

An excerpt from Deadline:

I’m told that MGM will shortly announce Gary Barber and Roger Birnbaum as its new co-chairmen/CEOs, effective once MGM emerges from Chapter 11. This is part of the long expected restructuring plan, as MGM brass has begun to solicit votes from lenders to convert 100% of the debut to equity, once they emerge from Chapter 11. The lenders will have until October 22 to vote.

Oct. 22, of course, is more than two weeks away and others, such as investor Carl Icahn, have been reported to be kicking the MGM tires, thinking about trying for their own deal. Also, if Spyglass does win out, it still has to get through bankruptcy court. Such a filing would be a so-called “prepackaged” bankruptcy, where the major creditors are in agreement before filing court papers. That’s normally faster than a regular bankruptcy, still takes some time. Thus, Bond 23 remains in its holding pattern.

Late in the afternoon, MGM PUT OUT A PRESS RELEASE ABOUT WHERE THINGS STAND CURRENTLY. Some excerpts:

LOS ANGELES, Oct. 7 /PRNewswire/ — Metro-Goldwyn-Mayer Inc. (MGM) today announced that it has begun a solicitation of votes from its secured lenders for a pre-packaged plan of reorganization (the “Plan”).

MGM expects to continue normal business operations throughout the restructuring process. The Plan provides for MGM’s employees, vendors, participants, guilds, and licensees to be unimpaired.

The Plan provides for MGM’s secured lenders to exchange more than $4 billion in outstanding debt for approximately 95.3 percent of equity in MGM upon its emergence from Chapter 11. Spyglass Entertainment would contribute certain assets to the reorganized company in exchange for approximately 0.52 percent of the reorganized company. In addition, two entities owned by Spyglass affiliates – Cypress Entertainment Group, Inc. and Garoge, Inc. – will merge with and into a subsidiary of MGM, with the MGM subsidiary as the surviving entity. The stockholders of Cypress and Garoge will receive approximately 4.17 percent of the reorganized company in exchange.

Following the receipt of the requisite consents from secured lenders during the solicitation period, and in order to implement the debt restructuring, MGM intends to commence pre-packaged Chapter 11 cases under the U.S. Bankruptcy Code and seek confirmation of the Plan. *Gary Barber and Roger Birnbaum, currently Co-Chairman and Chief Executive Officer of Spyglass Entertainment, would serve as the Co-Chairman and Chief Executive Officer of MGM following the company’s emergence from Chapter 11.* (emphasis added)

The LOS ANGELES TIMES STORY ON THE ANNOUNCEMENT added this:

The beginning of the solicitation of votes on Thursday means that MGM is no longer open to other offers. Companies that previously made acquisition or merger offers and have remained interested, including Warner Bros. and Lions Gate, may not make another bid unless the Spyglass plan is rejected by the debt holders.

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