It is a sorry end to a saga that feels like it has been running for ages. MGM’s financial woes were brought into focus first by the indefinite postponement of the Bond franchise and then by the delays caused in green-lighting The Hobbit. Now Reuters are reporting (via Yahoo! Entertainment) that MGM filed for bankruptcy on Wednesday morning.
A meeting of creditors last week voted to approve a packaged bankruptcy deal that would see $4bn in losses being shed and control of the studio being handed to secured creditors. Gary Barber and Roger Birnbaum, who run Spyglass Entertainment, will assume day to day management responsibility for MGM.
Lionsgate had proposed a merger with MGM, however in the end the final deal gives various secured creditors a stake in the equity of MGM as opposed to the secured debt they held. Much of this debt seems to have arisen from a $2.85bn leveraged buyout in 2005 and presumably the turnover of the studio has proved insufficient to service that debt, leading to the current bankruptcy.
MGM expects to be able to obtain funding upon emerging from bankruptcy to the tune of $500m, to enable it to finance assorted film and TV projects and Stephen Cooper, the MGM co-chief executive is reported as saying that the restructuring that will arise from the bankruptcy process will give MGM access to new sources of capital and improve their finances in the long run.
Hopefully we’ll be able to see the MGM lion roar again before too long. MGM has too glorious a history for anyone to want to see it disappear.
You can click through here to see the rest of Yahoo’s report.
