MGM's current owners--a consortium of Sony, Comcast, and private equity firms TPG Capital, Providence Equity Partners, the Quadrangle Group, and DLJ Merchant Banking Partners--will see their stakes in the studio wiped out in the prepackaged plan of reorganization filed on Wednesday. Debt from the $4.8 billion leveraged buyout in 2004 has crippled MGM's balance sheet.

More than 100 MGM lenders and bondholders approved a reorganization plan submitted by the company late last week. They will exchange nearly $4 billion in debt for a 95 percent stake in the studio once it emerges from bankruptcy. Organizational control of MGM will be transferred to a management team led by executives from Spyglass Entertainment. The company is half-owned by private equity firm Cerberus Capital Management and is being represented by O'Melveny & Myers.

Spyglass originally was set to take a 5 percent stake in the reorganized MGM. That now has been cut to one percent, according to The Hollywood Reporter. Activist investor Carl Icahn, who had been buying up MGM debt in a bid to merge the studio with another studio in which he's a major shareholder, Lions Gate Entertainment, apparently has leveraged his $400 million in MGM debt to reach a last minute settlement after opposing the company's reorganization plan.

Icahn's lawyer, White & Case global financial restructuring chair Thomas Lauria, did not immediately respond to a request for comment. But THR reports that Icahn has won a seat on MGM's board and an agreement to limit the role of Spyglass executives running the reorganized company. O'Melveny entertainment and media practice partner Christopher Brearton, who is representing Spyglass, did not respond to a request for comment.

In a press release issued by MGM Wednesday morning, the company states its intentions to raise $500 million to continue funding its operations, including the production of new films and television series. The debtor anticipates that a bankruptcy judge will approve its reorganization plan within 30 days.

According to the MGM bankruptcy filing, Skadden and Klee Tuchin are serving as cocounsel to the debtor. MGM lists assets and liabilities in excess of $1 billion in the filing, which is signed by general counsel Scott Packman, an O'Melveny alum.

Jay Goffman, global restructuring cochair at Skadden, is leading a team from the firm that includes private equity cochair Nick Saggese, M&A/restructuring partner Rick Madden, and restructuring counsel Glenn Walter. Kenneth Klee and Michael Tuchin, name partners at Klee Tuchin, are also advising MGM.


Post a Comment

Please do not hesitate to express your mind, suggestion or idea related this article/blog.

Subscribe to RSS Feed Follow me on Twitter!