Confirming its new proposal of a merger with MGM, Lionsgate has issued a statement saying the proposal represents “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.”
The statement, credited to Lionsgate co-chairman and chief executive officer Jon Feltheimer and vice chairman Michael Burns, went on: “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.”
Lionsgate said it believes its three largest shareholders, Carl Icahn, MHR Fund Management and Capital Research Global Investors, support the merger proposal.
The statement gave no further details of the proposal, which is thought to call for a merged company 45% owned by Lionsgate and 55% by MGM’s lenders.
The MGM lenders were only last week presented with a bankruptcy plan which, if approved, would leave the long-beleaguered studio mostly owned by its lenders and headed by Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum.
The plan calls for MGM’s secured lenders to exchange more than $4 billion in outstanding debt for 95.3% of the equity in the company - currently owned by a group that includes Providence Equity Partners, Comcast and Sony - when it emerges from Chapter 11 bankruptcy.
The lenders currently have until October 22 to vote on the bankruptcy plan though with the appearance of the new Lionsgate proposal the vote deadline could be extended.