Embattled MGM has earned a reprieve in its fight to pay down massive debt as creditors allowed the studio to forgo three interest payments.
In a statement issued on Thursday [October 1] the studio said: “MGM is pleased to announce that the Company has entered into a forbearance agreement with its lender group.
“The Company is appreciative of its lenders’ ongoing support. Under the terms of the agreement, MGM’s lender group has agreed not to enforce its rights or remedies arising as a result of the Company’s request to not currently pay interest due on September 30, October 31, and November 30, 2009.”
The statement went on to say: “This agreement, which expires December 15, 2009, provides MGM with additional liquidity as discussions continue regarding the development of an optimal capital structure in support of the Company’s long-term business plan.
“With the agreement in place, MGM has taken an important first step in ensuring that the Company has enhanced financial stability and adequate liquidity to implement its business strategies.”
Harry Sloan recently stepped down as CEO and the triumvirate of Mary Parent, CFO Bedi Singh and restructuring specialist Stephen Cooper assumed control.
The studio has struggled to raise money to refinance $3.7bn in debt, the bulk of which emanates from the 2005 buy-out by an investor consortium comprising Providence Equity Partners, Sony and Comcast, among others.
Earlier this year the studio hired investment bank Moelis & Co to help refinance its debt.