MGM has unveiled details of the bankruptcy plan which, if approved, will leave the long-beleaguered studio mostly owned by its lenders and headed, as expected, by Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum.
MGM has begun soliciting votes for the plan from its secured lenders, with a deadline (which could be extended) of October 22. In a statement, the studio said it “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 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.
Spyglass would contribute certain assets in exchange for 0.52% of the reorganised company. Cypress Entertainment Group and Garoge, two entities owned by Spyglass affiliates, would merge with MGM and their stockholders would get another 4.17% of the reorganised company.
Once MGM emerged from Chapter 11, Barber and Birnbaum would become co-chairman and CEO’s of the studio.
Barber and Birnbaum recently signed a letter of intent to join MGM, which had been for sale for almost a year but had failed to attract high enough bids to satisfy its creditors.
The vote on the reorganisation plan could help some projects involving MGM move closer to production. Recent reports have said that Peter Jackson’s $500m two-part version of The Hobbit, to be financed by MGM and Warner’s New Line division, is close to getting a greenlight. The project has been aiming for a January start in New Zealand, though a row between Jackson and actors’ unions has already cast some doubt over that plan.