MGM's Creditors Said Close to Accord Handing Studio Management to Spyglass
Metro-Goldwyn-Mayer Inc. creditors, grappling with the studio’s $3.7 billion debt, are close to an agreement to turn over management to Spyglass Entertainment Group, two people with knowledge of the situation said.
Spyglass, led by filmmakers Gary Barber and Roger Birnbaum, would receive 4 percent ownership in MGM in return for their rights to films including “Sixth Sense” and “Seabiscuit,” said one of the people, who declined to be identified because the discussions are private.
An accord, which could be announced in days, would involve a bankruptcy filing to convert the debt into a more than 90 percent stake in MGM, said one person. Los Angeles-based MGM has two releases for 2010, according to Box Office Mojo. Spyglass, which is being advised by Deutsche Bank, would need to raise as much as $500 million for production, the person said.
Among the films MGM has on its schedule further out are a James Bond feature and a two-picture installment of “The Hobbit,” a prequel to the blockbuster “Lord of the Rings” series. MGM has the rights to “The Hobbit” with Time Warner Inc.’s Warner Bros.
Negotiations with Los Angeles-based Spyglass intensified two weeks ago, after Lions Gate Entertainment Corp., which had made a presentation to creditors on July 14, signaled it likely wouldn’t bid, one of the people said.
Vancouver-based Lions Gate, an independent film and TV producer, is fighting a hostile takeover bid by billionaire investor Carl Icahn.
Barber and Birnbaum didn’t respond to requests for interviews. The Wall Street Journal reported the story earlier.
The deal could still fall apart, the two people said. Summit Entertainment LLC, producer of the “Twilight” vampire romance movie series, continues to confer with creditors, according to a third person. Lions Gate could also re-enter the talks, a financier who has been involved in the talks said.