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Bankruptcy Court Approves MGM’s Chapter 11 Plan; MGM Stakeholder Carl Icahn Extends His Tender Offer For Lions Gate
November 15, 2010 by Bankruptcy Search
Filed under Bankruptcy Help
AU.S. Bankruptcy Court in New York approved Metro-Goldwyn-Mayer Inc.’s Chapter 11reorganization filing Friday,including authorizing last-minute modifications made last weekto the prepackaged plan.
Last week, financially crippledMGM filed for bankrupty after its leading creditors struck a deal with corporate raider Carl Icahn. In recent months, Icahn has become a significant debt holder in the studioand has been aggressively pushing for amerger with Lions Gate Entertainment, where he is the largest shareholder.
Among the items authorized was that MGM could seek a $500-million loan to cover its operations and production commitmentsonceit emerges from bankruptcy, which is expectednext month.The courthas set aconfirmation hearing on the bankruptcy plan for Dec. 2, but it could be days or even weeks following thatdate that MGM would actually emerge from bankruptcy.
Although MGM secured lenders overwhelmingly approved a prepackaged bankruptcy plan in late October, whereby they will swap morethan $4billion in debt for equity in areorganized studio headed bythe chief executives of SpyglassEntertainment,Icahn only agreed to support that agenda after winning certain concessions. Those concessions include striking15 titles from the Spyglass library that were to be merged into MGM, thus lowering Spyglass’ stakein the studioto under 1%from 5%;theright to appointone person toMGM’snine-person board; anda promise to negotiate in good faith with Lions Gate about a potential merger.
This week, Lions Gate’s top executives were in New York continuing merger talks with MGM creditors and, according totwo people familiar with the matter,presenteda sweetened proposal tothe originalone that would givecreditors 55% of the combined company.
Meanwhile, Icahn — whoowns 33.5%of Lions Gate and has been trying to seize control of the company formore than18 months — announced this morning that he is extending his $7.50-per-share tender offer forthe Santa Monica-based film and television studio until Nov. 22. Though Icahn appears to be
