MGM watch: bankruptcy court approves studio’s reorganization plan

Metro-Goldwyn-Mayer Inc., home studio of the James Bond movies, today won the approval of U.S. Bankruptcy Court in New York for MGM’s reorganization plan.

MGM said in a statement that it expects to exit bankruptcy in mid-December. Studio lenders will exchange about $5 billion in debt and interest for a stake in the new MGM, that will be run by Gary Barber and Roger Birnbaum, the co-founders of Spyglass Entertainment.

The development comes less than a month after MGM filed for bankruptcy. In its filings, MGM said it wants to take Agent 007 off hiatus and have Bond 23 out in November 2012. MGM and Eon Productions jointly control the 007 franchise, and Eon said in April it was suspending development of the film while MGM worked through its financial troubles.

For more, you can read a story at Bloomberg.com BY CLICKING HERE. To read Reuters’s story (the news service that once employed 007 creator Ian Fleming), just CLICK HERE.

MGM watch: MGM files for bankruptcy, says it wants to jumpstart the 007 series

Metro-Goldwyn-Mayer filed for Chapter 11 bankruptcy on Nov. 3. The home studio of James Bond (and half-owner of the 007 film franchise) made its filing in U.S. Bankruptcy Court in New York City. The filing also indicates that jumpstarting the now-dormant 007 film series is a priority.

Here’s part of a story by Bloomberg.com:

New James Bond films may be released every second year starting in November 2012, MGM said. It aims to own 50 percent of Bond 23, due out that year, with an equal partner paying all of the production costs, it said. Later Bond movies would be wholly owned and funded by MGM, the company said.

MGM is going to bankruptcy court to wipe out almost $4 billion in debt. The studio’s financial uncertainty prompted Eon Productions, which controls the other half of the franchise, to suspend development of Bond 23. MGM’s filing is the first time any entity involved in the matter has provided any kind of timetable for Bond’s return to the screen following 2008’s Quantum of Solace.

Under the revamping plan, Spyglass Entertainment co-founders Gary Barber and Roger Birnbaum will take command of MGM, which will only produce films and TV shows and cut distribution deals with other studios. While most productions will be modest, MGM would produce a few large films such as Bond 23 and The Hobbit. Eon’s boss people, Michael G. Wilson and Barbara Broccoli, haven’t spoken publicly about the Spyglass plan.

The studio’s statement on the filing tried to sound reassuring and said it’s anticipating the journey through bankruptcy court will be short:

MGM has sufficient cash on hand, and the consent of its lenders to use this cash, to fund normal business operations throughout the Chapter 11 process. MGM has filed “first-day” motions seeking immediate Court approval to continue paying its employees, vendors, participants, guilds and licensors in the ordinary course of business during the entire Chapter 11 process, for both pre-petition and post-petition obligations. MGM anticipates that the Plan will be confirmed by the Court in approximately 30 days.

007 questions about how the MGM-Spyglass deal affects James Bond

We may not be able to provide the answers but we’re good at asking questions about James Bond. Here’s our special MGM financial restructuring edition.

001. How long will MGM be in bankruptcy court? Metro-Goldwyn-Mayer Inc. is going to file for bankruptcy as part of a plan that MGM creditors approved on Oct. 29. The filing will be what’s known as a “prepackaged” bankruptcy, meaning creditors are agreed on terms ahead of time to try to minimize time in bankruptcy court.

The Wall Street Journal, in a story about the vote by MGM creditors, said the studio might get out of bankruptcy court in “a month or two.” The Los Angeles Times said it might be as little as one month.

If these reports are correct, MGM would get out of bankruptcy court in December or early 2011. But given the twists and turns in the MGM financial saga, you might avoid betting on a specific date.

002. But Bond 23 will get back on track pretty soon, right? That depends on your definition of soon.

003. Once MGM gets through bankruptcy court, what else might hold up Bond 23?

For one thing, the revamped MGM will be smaller and no longer release films itself. MGM, which controls half of the 007 film franchise, will be run by Gary Barber and Roger Birnbaum, the co-founders of Spyglass Entertainment. The duo will have to cut deals with other studios to release films. There’s a lot of change ahead at the studio.

Meanwhile, there have been signs that Eon Productions, the other half of the Bond film franchise, didn’t exactly move quickly on Bond 23, even before it said in April development of the film was suspended indefinitely because of MGM’s financial ills. The production company issued a press release last year about how Peter Morgan, writer of Very Important Films such as Frost/Nixon, would help do Bond 23’s script. Morgan has disclosed he never got past the treatment stage while questioning the basic Bond concept. That raises the question whether Eon wasted its time before MGM’s situation worsened.

004. Can the revamped MGM properly finance a Bond movie? 2008’s Quantum of Solace, released by Sony’s Columbia Pictures, had a reported budget of $230 million. MGM’s business plan calls mostly for much-more modestly budgeted projects with occasional big projects. Presumably, Bond 23 would be one of those. The actual budget may depend on what studio ends up doing a deal with MGM to release Bond 23.

005. Does (and should) 007 face some budget tightening? Chances are unlikely Bond 23 would be a bargain basement production but it remains to be seen whether it’s as pricey as Quantum of Solace. A somewhat less expensive Bond 23 might not be a bad thing; Quantum, despite its ample budget, was seen by many fans as not being as good as the previous 007 film, Casino Royale. A major unknown is what studio actually ends up releasing Bond 23 and the terms of its deal with MGM.

006. What studio will release Bond 23? According to Mike Fleming of Nikki Finke’s Deadline.com Web site, there will be a lot of interest among major studios:

If MGM isn’t a distributor, the next installment of James Bond will be a jump ball. Expect Sony (which distributed Casino Royale) to battle it out with Warner Bros and Fox, but watch Paramount emerge in the thick of it because of the close relationship that the studio has developed with Spyglass since that company became co-financier of Star Trek and the followup that is in the works.

007. Is the MGM creditor vote good news or not for Bond fans? Assuming MGM gets out of bankruptcy court quickly, it’s a positive step — but it doesn’t appear to jump start Bond 23 by itself. The Spyglass deal is complicated and was arrived at only after MGM couldn’t sell itself at a price debt holders wanted. The new MGM management team’s job is just starting. We also don’t know what kind of relationship the new regime will have with Eon boss people Michael G. Wilson and Barbara Broccoli.

MGM watch: debtholders approve Spyglass plan

Metro-Goldwyn-Mayer Inc., which controls half of the James Bond film franchise, said its creditors approved a plan that would take the studio into bankruptcy court, cut its debt and install Gary Barber and Roger Birnbaum, the co-founders of Spyglass Entertainment, in charge of MGM.

MGM’s actual press release, WHICH YOU CAN READ BY CLICKING HERE, merely says “that the secured lenders voting in the Company’s solicitation process have overwhelmingly approved its proposed plan of reorganization (“Plan”). MGM will now move expeditiously to implement that Plan, which will dramatically reduce its debt load and put the Company in a strong position to execute its business strategy.”

Here’s how the Wall Street Journal, in a story by Mike Spector and Lauren A.E. Schucker described what will happen next and why the plan got creditor support:

MGM plans to file for bankruptcy protection in coming days, said a person familiar with the matter, and could exit court in a month or two.

MGM’s largest creditors — led by J.P. Morgan Chase & Co. and hedge funds Anchorage Advisors and Highland Capital Management — fended off a late-stage bid by activist investor Carl Icahn to upend the vote. Mr. Icahn made several offers in recent days to buy debt from other MGM creditors in an effort to prevent the studio from receiving the votes it needed to proceed with the prepackaged bankruptcy. Mr. Icahn pressed Anchorage and other large MGM creditors to abandon the Spyglass plan in favor of a merger with rival Lions Gate Entertainment Corp., a company that Mr. Icahn has been trying to take over all year as its largest shareholder.

But Mr. Icahn’s offers to purchase debt at a premium to where it currently trades failed to gain enough traction.

Under a “prepackaged bankruptcy,” creditors agree before on terms before a bankruptcy filing and try to keep time in bankruptcy court at a minimum. Here’s an excerpt from the Journal about timing:

MGM had planned to file for bankruptcy as soon as Sunday, but the filing could be delayed until early next week, said the person familiar with the situation. The main reason: a deal just hashed out between MGM’s big creditors and Mr. Icahn.

MGM’s largest creditors were on the phone with Mr. Icahn and his representatives for hours Thursday night and from about 9 a.m. to 6 p.m. Friday, the person said. They made several tweaks to the Spyglass plan to appease Mr. Icahn and other creditors, the person said.

Eon Productions, which controls the other half of the 007 franchise, in April said it was suspending development of Bond 23 because of MGM’s uncertain financial situation. What’s not known is how quickly work on Bond 23 may resume or when the film could even be released.

Under the now-approved revamping plan, MGM will no longer release films itself, instead cutting deals with other studios. Also,the disclosure of Peter Morgan, hired last year to help write Bond 23, that he only wrote a treatment, or outline, and not a full script suggests Eon has a lot of work to do separate from developments at MGM.

MGM watch: Wall Street Journal previews vote by studio debt holders

The Wall Street Journal has a detailed story on its Web site previewing the Oct. 29 vote by Metro-Goldwyn-Mayer Inc. debt holders that will determine who gets to run MGM: Spyglass Entertainment’s co-founders Gary Barber and Roger Birnbaum, or investor Carl Icahn.

The story (which you can read in its entirety by CLICKING HERE) lays out this scenario if the Spyglass plan gets the nod:

If it wins enough support—odds appear to favor it—MGM will file for a Chapter 11 bankruptcy as soon as Sunday, and the 86-year-old company, the source of more than 200 Academy Awards for classics like “Gone with the Wind,” will pass to distressed-debt investors more accustomed to reworking home-health-care firms and community banks.

They aim to be ruthless about costs. They plan to outsource to another studio the task of distributing films to theaters, then focus on the television business—cutting deals with cable-TV channels, video-on-demand services and online streaming companies, especially abroad….(Barber and Birnbaum) would make just four to six movies a year, most with modest budgets of $50 million or so, though allowing for an occasional big one.

The story, by Mike Spector and Lauren A.E. Schuker, includes details of a March meeting where creditors didn’t support a MGM management plan to raise $1 billion to make 10 “big movies” a year, eventually leading to the Spyglass plan.

MGM’s half stake in the James Bond franchise is only mentioned in passing and there’s no specific information on the stalled Bond 23. Michael G. Wilson and Barbara Broccoli, the half-siblings who run Eon Productions, suspended work on Bond 23 in April because of the MGM financial uncertainty. If the Journal story is accurate, one possibility is that the March meeting described in the Journal story is one reason why. Eon controls the other half of the 007 franchise.

Tentative answers to 007 questions about Bond 23’s indefinite delay

Eon Productions indefinitely delayed Bond 23 production six months ago because of continuing financial trouble at Metro-Goldwyn-Mayer Inc. At the time, we posed (00)7 questions about the move. There aren’t many definitive answers, but here’s what can be said about the seven questions:

001. How long is indefinite? To quote James Bond (Sean Connery) when he was in the pool with Bambi and Thumper in Diamonds Are Forever, “I haven’t found out yet.” However, one option being considered by MGM debt holders would turn control over to Spyglass Entertainment executives and involve a trip into bankruptcy court. That would involve a “prepackaged” bankruptcy where creditors agree on terms in advance. Still, that’s likely to take a few months.

Also, it appears the Los Angeles Times was correct when it reported in August that Bond 23 didn’t have a script ready for shooting. (We’ll get to that shortly.) Daniel Craig also is doing other projects.

So let’s see: possible trip to bankruptcy court, new management getting up to speed at MGM, a busy actor and a script that’s not ready. To get Bond 23 out in time for Christmas 2011, it’d have to begin shooting by, say, April 1 or so. That appears not to be in the cards. And given the Spyglass deal with MGM isn’t yet certain — investor Carl Icahn is pitching a merger of MGM with Lions Gate Entertainment — you can’t yet count on 2012.

002. Does this mean Daniel Craig has played 007 for the last time? Craig, in his public statements, has said he wants to continue. To read one such example from August in the Hero Complex blog of the Los Angeles Times, CLICK HERE. Still, Craig is a hired hand (albeit a well compensated one). We’ll chalk this down as a tentative no, not because of the actor but because of the uncertainty of the MGM situation.

003. Bye bye Sam Mendes? Mendes’s reported participation as director had generated some buzz about Bond 23 before the production shutdown. David G. Wilson, son of Eon bossman Michael G. Wilson, told the IGN Web site (CLICK HERE for the full post) that Mendes is “very excited to do this film — and it’s a matter of timing too. He’s a hot director, and there’s a danger he would have to go and work on something else so we have to be patient and optimistic.” Once again, we’ll chalk the answer to our original question as a tentative no. The younger Wilson’s comments seem to leave wiggle room that Mendes could depart while saying the director remains enthusiastic about Bond.

004. Bye bye Peter Morgan? Answer affirmative, courtesy of the screenwriter himself. In an interview on the Coming Soon blog said he never finished an outline for Bond 23 when the plug got pulled and he wouldn’t be returning to the project. Eon announced last year it would team Morgan with Neal Purvis and Robert Wade. But Morgan, in the interview, talks about his other projects.

005. Do the Broccolis take this opportunity to cash out? No.

006. Bye bye Judi Dench? Assuming continued good health, answer is likely no as long as Craig returns.

007. How much damage does this do to the 007 franchise? That’s still the biggest question and still the toughest to answer. There have been production shutdowns for about half of the 21 years since Licence to Kill in 1989. Twice (1989 to 1995 and 2002 to 2006) the normal two to three years between films has been extended by one kind of hiatus or another. The current hiatus since 2008 is likely to run at least four years before it’s over.

The whole point of rebooting with Casino Royale supposedly was to show Bond at the start of his career. The momentum of that idea seems blunted even assuming a Craig return in 2012.

Most of these aren’t satisifying answers, but little about the past six months has been satisifying to 007 fans.

MGM watch: Carl Icahn makes his move

Investor Carl Icahn made an offer to Metro-Goldwyn-Mayer Inc. debt holders he hopes they can’t refuse — and entice them to vote against a plan for Spyglass Entertainment to take control of MGM, which controls half of the James Bond franchise.

Here’s an excerpt from a Bloomberg.com story:

Carl Icahn offered to guarantee Metro-Goldwyn-Mayer Inc. lenders a minimum price for the film studio’s debt if they vote with him to block a plan to turn over management of the company to Spyglass Entertainment.

The 74-year-old billionaire offered lenders the right to sell him MGM’s senior secured loans for 45 cents on the dollar, about what they have fetched in recent trades. The offer is conditioned on acceptance by holders of $963 million of the Los Angeles-based studio’s debt, Icahn said today in a statement.

Icahn supports an alternative proposal by Lions Gate Entertainment Corp. to acquire MGM for as much as $1.8 billion in equity and debt.

You can read the entire story by CLICKING HERE.

MGM debtholders have until Oct. 29 to vote on the Spyglass plan, which would also involve a trip into bankruptcy court in a “prepacked bankruptcy.”

MGM watch: studio extends creditor vote 1 week to Oct. 29

Metro-Goldwyn-Mayer Inc. extended by one week, to Oct. 29, the time for its creditors to vote on a plan where Spyglass Entertainment’s top executives would take control of MGM after the studio went through a “prepackaged” bankruptcy. The move further delays when the fate of Bond 23 can be settled.

The press release WHICH YOU CAN VIEW FOR YOURSELF BY CLICKING HERE, doesn’t give much in the way of details.

LOS ANGELES, Oct. 15 /PRNewswire/ — Metro-Goldwyn-Mayer Inc. (MGM), today distributed a supplement to the solicitation package that was originally distributed to MGM’s secured lenders on October 7, 2010. The supplement contains additional details to the Company’s financial information included in the original solicitation materials. In order to provide lenders sufficient time to review the supplemental information, MGM has extended the voting deadline by one week to 5:00 PM ET on October 29, 2010.

Two days earlier, Lions Gate Entertainment, which is allied with investor Carl Icahn in making a play for MGM, said why creditors should cast their lot with that company. YOU CAN READ THAT PRESS RELEASE BY CLICKING HERE. Here’s part of the sales pitch:

This is a unique, once in a lifetime opportunity to create a dynamic, forward-looking studio that unlocks tremendous potential value for Lionsgate’s shareholders and MGM’s various stakeholders,” said Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns. “A Lionsgate merger with MGM is a natural fit that would bring together two of the most powerful libraries in the world, create significant cost savings, consolidate our mutual global channel operations and generate significant incremental revenue and cash flow. It would create a combined entity with enough scale to leverage all of our distribution platforms worldwide.”

MGM watch: Lions Gate offers to combine operations with MGM

The Associated Press IN A STORY YOU CAN VIEW BY CLICKING HERE reports that Lions Gate Entertainment is offering to combine its operations with Metro-Goldwyn-Mayer Inc. Here’s how the story starts:

NEW YORK — Lions Gate is offering to combine its business with MGM in a deal supported by billionaire investor Carl Icahn, who owns stakes in both studios.

Lions Gate Entertainment Corp. said Tuesday it has sent a proposal for a combination with financially troubled Metro-Goldwyn-Mayer Studios Inc.

Lions Gate said the combined company would be owned by its shareholders and by MGM’s creditors. These include Icahn.

Terms weren’t disclosed, though a report in the Los Angeles Times said the deal would give MGM’s lenders a 55 percent in the combined company. Lions Gate and MGM declined to comment.

Spyglass Entertainment on Oct. 7 began seeking support from MGM creditors for a plan where Spyglass’s top executives would take command of MGM after a “pre-packaged” bankruptcy. MGM’s secured creditors (meaning they have some sort of collateral) have until Oct. 22 to weigh in on that proposal.

For 007 fans, more fun, more complications. Remember the line in 1971’s Diamonds Are Forever where Willard Whyte played Monopoly “with real buildings”? 007’s fate depends on people like that.

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.