MGM's looking for buyer
2009-11-14 21:20
Los Angeles - Struggling movie studio Metro-Goldwyn-Mayer Inc. is looking for a buyer.
The home of the James Bond and Pink Panther franchises said on Friday it has begun to explore strategic options including "a potential sale of the company".
In a statement, MGM also said its lenders have agreed to grant the company another respite until January 31 from interest payments on nearly $4bn in debt.
The decision, reversing its refusal to sell a year ago, came during a conference call on Friday between restructuring expert Stephen Cooper, now MGM's vice-chair, and the 140 lenders owed about $3.7bn in bonds maturing in mid-2012, according to a person close to the situation.
The lenders agreed to seek outside investors for a new partnership, investment or sale of part or all of the company. Its most valuable asset is its library of 4 000 movie and TV-show titles including such as Rocky and Dances With Wolves. It also owns subsidiary United Artists, headed by Tom Cruise, whose film Valkyrie grossed a respectable $200m worldwide after its release last year.
Home video market
But the company has fallen on hard times and the home video market has shrunk.
MGM's latest release, a remake of the 1980 musical Fame, was panned by critics and quickly vanished from most theaters after its September 25 release, making just $27m worldwide.
Financial adviser Moelis & Co. is expected to send out non-disclosure agreements and detailed financial information to interested parties by early next week, the person said.
Potential buyers include Time Warner Inc., the parent of the Warner Bros. studio, and News Corp., home of 20th Century Fox.
On Thursday, with rumours swirling of its potential sale, Lions Gate Entertainment Corp. vice-chair Michael Burns also said his company was interested in taking a look.
"They have fantastic franchises like James Bond, they have half of The Hobbit. Of course it's interesting to us," Burns told CNBC's Fast Money.
Although MGM had the cash on hand to make the interest payments, pushing back the interest payments allows it to complete three movies it has in the pipeline for next year: Hot Tub Time Machine, Red Dawn and The Zookeeper, the source said.
MGM was taken private for nearly $5bn in 2005 by a group led by Providence Equity Partners, Texas Pacific Group, Sony Corp. and Comcast Corp., DLJ Merchant Banking Partners and Quadrangle Group.
In 2007, MGM made $558m alone from its library of titles, but since then DVD sales have declined industrywide, and a large chunk of those sales has likely vanished.
Besides the bonds, has a $250m revolving credit facility with JPMorgan due in April.
- AP