MGM files for bankruptcy

[News_Editor]

MGM files for bankruptcy

2010-11-04 01:23:08 GMT+7 (ICT)

LOS ANGELES (BNO NEWS) -- Metro-Goldwyn-Mayer Inc. (MGM) on Wednesday announced that the company and approximately 160 of its affiliates have filed Chapter 11 bankruptcy.

MGM's secured lenders had previously voted and approved the proposed pre-packaged bankruptcy plan of reorganization in which the company's secured lenders to exchange more than $4 billion in outstanding debt for most of the equity in MGM upon its emergence from Chapter 11.

Two affiliates of Gary Barber and Roger Birnbaum, currently co-Chairman and Chief Executive Officer of Spyglass Entertainment, will serve as co-Chief Executive Officer of MGM Holdings Inc. and as co-Chairman and co-Chief Executive Officer of the primary operating subsidiary of MGM Holdings Inc.

MGM creditors reached an agreement with corporate raider Carl Icahn, who holds significant debt, and was trying to merge MGM with Lions Gate.

"For many months, we have been working with our lenders to explore the strategic options available to MGM to improve MGM's financial position and maximize the Company's value," said Co-Chief Executive Officer Steve Cooper.

"By sharply reducing MGM's debt load and providing access to new capital, the proposed plan of reorganization achieves these goals. Having received approval through our recently completed solicitation process, we are pleased that the lenders support MGM's approach. We now look forward to quickly emerging from Chapter 11."

Upon its exit from bankruptcy, MGM said it was expecting to raise approximately $500 million in financing to fund operations, including production of a new slate of films and television series. MGM will retain ownership of all of its assets.

Since 2005, MGM had struggled with excessive debt. It was then sold in a $2.85 billion leverage buyout by a group that included private equity firms Providence Equity Partners, TPG Capital LP, Quadrangle Group and DLJ Merchant Banking Partners, as well as Comcast Corp, and Sony Corp.

MGM expects the restructuring plan to be confirmed by the U.S. Bankruptcy Court for the Southern District of New York in approximately 30 days.

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