MGM Holdings Inc., the parent of Hollywood studio Metro-Goldwyn-Mayer, hired JPMorgan Chase & Co. and Goldman Sachs Group Inc. to manage its initial public offering, according to two people familiar with the situation.
JPMorgan will lead the share sale, said the people, who asked not to be identified because the information isn’t public. MGM submitted a draft IPO registration statement confidentially to the U.S. Securities and Exchange Commission, the Los Angeles-based company said in a press release dated today, without disclosing details of the offering.
An IPO may help raise more money to make films. MGM filed for bankruptcy in 2010 after spurning a takeover bid from Lions Gate Entertainment Corp. and activist investor Carl Icahn, and emerged less than two months later. The studio holds rights to J.R.R. Tolkien’s “The Hobbit” and to the James Bond movies, and is working through other studios to release its pictures.
Sony Corp. released the most recent Bond movie, “Quantum of Solace,” in 2008. The next one, “Skyfall,” is due out in November.
For “The Hobbit,” MGM has partnered with Time Warner Inc.’s Warner Bros., which will release the first of two planned films in December. Director Peter Jackson may make a third installment, the Los Angeles Times reported yesterday, citing people with knowledge of the situation.
MGM’s near-term production slate also includes “Hope Springs,” with Meryl Streep and Steve Carell, and a remake of “Robocop,” both being released by Sony, and “Hansel & Gretel: Witch Hunters,” which will be distributed by Viacom Inc.’s Paramount Pictures.
The studio is run by Gary Barber, founder of Spyglass Entertainment Group Inc., and his partner Roger Birnbaum, who serve as co-chairmen and co-chief executive officers.
MGM obtained a $500 million revolving credit facility in February, which it used to retire its previous debt and invest in its film and television business, according to a statement at the time. JPMorgan Chase and Deutsche Bank led the financing.
Icahn, who converted debt into equity in the bankruptcy, is MGM’s largest shareholder, according to a person with knowledge of the situation. Other investors include Highland Capital Management LP, Solus Alternative Asset Management LP and Anchorage Capital Group LLC, each of which has board representation.
Icahn didn’t respond to a telephone request for comment.
MGM Holdings filed under the Jumpstart Our Business Startups Act, known at the JOBS Act, which lets companies with annual sales of less than $1 billion file IPO registrations confidentially with the SEC. The law, enacted in April, requires that the companies make their filings public 21 days before starting a road show to market to investors.
The law was designed to let companies explore a stock offering without revealing their plans to competitors and the general public, according to Sam Hamadeh, chief executive of New York-based PrivCo LLC, which tracks data on closely held companies. MGM may still be considering a sale of the whole business to another buyer, he said.
“These independent studios tend to have a hit-driven business,” Hamadeh said in a telephone interview. “They don’t make good public companies.”
Susie Arons, a spokeswoman for MGM Holdings, declined to comment on when the studio might start its road show.
The company is considering selling shares as the U.S. IPO market is set for its busiest week since April, with companies including Del Frisco’s Restaurant Group Inc. attempting to raise as much as $824 million in total, data compiled by Bloomberg show. The sales follow Facebook Inc.’s disappointing debut in May that froze the IPO market for more than a month.
IPOs earlier this month by Palo Alto Networks Inc., Kayak Software Corp. and teen retailer Five Below Inc. paved the way for more share sales after the companies surged in their first days of trading.
MGM traces its roots back to the 1924 merger of Metro Pictures Corp., Goldwyn Pictures and Louis B. Mayer Productions, according to its website. The studio’s Academy Award-winning films over the years include “Gone With the Wind,” “West Side Story,” “Rocky” and “The Silence of the Lambs.”
The studio was bought and sold by billionaire Kirk Kerkorian three times from the late 1960s to 2005, when it was purchased by a Sony-led group.