MGM Prepares For Prepackaged Bankruptcy

Friday, 08 October 2010 08:50 Written by  Matt Molgaard
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MGM Prepares For Prepackaged Bankruptcy

MGM has begun seeking its creditors’ approval for a prepackaged bankruptcy plan in which they’ll exchange over $4 billion debt for equity in a new company that holds the right to the James Bond Franchise as well as the two-part Hobbit series.

Spyglass Entertainment will contribute some assets and merge two subsidiaries into MGM for a 4.69 percent stake in the accompany.

Creditors would hold over 95 percent of the company after it exits from Chapter 11.

Approved holders of secured debt as of October 4th will be allowed to vote. The company declined to list creditors that can participate, though key creditors include Anchorage Advisors LLC, Highland Capital Management LP and billionaire investor Carl Icahn.

Voting will continue until October 22nd , when the company intends to file for bankruptcy and exit the court process within a month.

After exiting bankruptcy, Spyglass co-founders Gary Barber and Roger Birnbaum will serve as co-chairmen and CEO’s.

The move signals the end of a process that began last year when the company fought to right itself from a dearth of hit movies, DVD sales declination and a hefty debt burden brought on by the $5 billion purchase by a group lead by Providence Equity Partners, Texas Pacific Group, Sony Corp. and Comcast corp.

This may bode well for the production of The Hobbit, which MGM is set to make with Warner Bros.

Source: Yahoo

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