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Court approves MGM bankruptcy plan

2010-12-03 03:08:25 GMT+7 (ICT)

LOS ANGELES (BNO NEW) — Metro-Goldwyn-Mayer Inc. (MGM) on Thursday announced that the U.S. Bankruptcy Court for the Southern District of New York has approved the company's "pre-packaged" plan of reorganization, which clear around $5 billion in debt.

The approval will help MGM and its subsidiaries to emerge from Chapter 11 in short order.  In confirming the plan, Judge Stuart M. Bernstein found that it satisfied the various requirements of the U.S. Bankruptcy Code.

MGM expects the plan to become effective by mid-December, once the conditions of effectiveness have been met.  Upon its emergence, the company's secured lenders will exchange approximately $5 billion, including accrued interest and fees, for most of the equity in MGM.  

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 previously received approval, on November 12, from the court on its motion to retain JPMorgan Chase to arrange $500 million in exit financing to fund operations, including production of a new slate of films and television series, and expects to have that exit financing funded by mid-December.  

"Today's ruling is an important milestone for MGM," said Co-Chief Executive Officer Stephen Cooper. "Thanks to the support of our lenders and the hard work of our employees, we have moved through the restructuring process quickly." 

"By dramatically reducing MGM's debt load and providing MGM with access to new capital, the reorganization plan the Court confirmed today will enable MGM to emerge from this process with a solid financial foundation and will position MGM to be a successful studio going forward," Cooper added.

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.

Early last month, MGM filed for bankruptcy.

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-- © BNO News All rights reserved 2010-12-03

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