MGM Studio Files for Bankruptcy

35MM · Post by **35MM** » Wed Nov 03, 2010 10:57 am

By Jonathan Stempel
Reuters

NEW YORK

Metro-Goldwyn-Mayer Studios Inc filed for bankruptcy on Wednesday, under a plan that would put one of Hollywood's most storied film studios under the control of its lenders.

The Chapter 11 filing follows a vote by MGM creditors last week to endorse a "prepackaged" bankruptcy that would put MGM under the control of Hollywood executives Gary Barber and Roger Birnbaum, who control the Spyglass Entertainment film company.

MGM also agreed to concessions to Carl Icahn, one of its largest debtholders, to win the billionaire's support for its restructuring.

Icahn had previously supported a rival bid to merge MGM with another studio, Lions Gate Entertainment Corp.

Founded in 1924 and known for its roaring lion logo, MGM controls the James Bond franchise, and has also produced or released many of Hollywood's best-known films, including "The Wizard of Oz" and "Ben-Hur."

Its reorganization would allow secured lenders including Credit Suisse Group AG and JPMorgan Chase & Co to swap more than $4 billion of MGM debt for most of the equity in a reorganized company.

CUTTING DEBT, RAISING CAPITAL

MGM has struggled with too much debt since 2005 when it was sold in a $2.85 billion leveraged buyout.

The buyout group included private equity firms Providence Equity Partners, TPG Capital LP, Quadrangle Group and DLJ Merchant Banking Partners, as well as Comcast Corp

and Sony Corp..

MGM said it expects a federal bankruptcy judge to approve the restructuring in about 30 days.

The Los Angeles-based company and roughly 160 affiliates sought protection from creditors with the U.S. bankruptcy court in Manhattan. Judge Stuart Bernstein was assigned to the case.

Stephen Cooper, MGM's co-chief executive, in a statement said the reorganization will improve MGM's finances by "sharply reducing" debt and providing access to new capital.

MGM said it expects to raise $500 million upon emerging from bankruptcy to fund operations, including the production of films and TV series.

ICAHN

Icahn said the plan calls for MGM to adopt a series of corporate governance changes, and give him the right to appoint a board director once the company emerges from bankruptcy.

MGM also agreed not to acquire the film library of Cypress Entertainment, a Barber and Birnbaum affiliate, he said.

"We were able to obtain an agreement to make changes to the MGM prepackaged plan that allows me to support it and enables the company to avoid a potentially costly and disruptive bankruptcy," Icahn said in a statement.

Barber and Birnbaum would also sit on the board of a reorganized MGM, along with seven directors named by lenders and several independent directors, MGM said.

Lions Gate has separately been suing Icahn, alleging that he interfered with its efforts to merge with MGM.

A Lions Gate spokesman did not immediately return a call seeking comment. Lions Gate has produced the hit TV show "Mad Men" as well as the Oscar-winning film "Precious."

Spyglass' involvement with MGM had also been seen as key to a lucrative arrangement with Time Warner Inc's Warner Bros Pictures and the director Peter Jackson to film two movies based on J.R.R. Tolkien's novel "The Hobbit."

The case is In re: Metro-Goldwyn-Mayer Studios Inc, U.S. Bankruptcy Court, Southern District of New York, No. 10-15774.

(Reporting by Jonathan Stempel, editing by Gerald E. McCormick, Dave Zimmerman)

Copyright 2010 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Copyright © 2010 ABC News Internet Ventures

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Jim Roots · Post by **Jim Roots** » Wed Nov 03, 2010 11:59 am

Somewhere in Hell, Louis B. Mayer is rolling. Or maybe he's just being turned on his spit over the fires...

Jim

Jack Theakston · Post by **Jack Theakston** » Wed Nov 03, 2010 12:06 pm

Gee, what a surprise.

drednm · Post by **drednm** » Wed Nov 03, 2010 12:18 pm

What was MGM's last hit film other than the James Bond franchise?

dr.giraud · Post by **dr.giraud** » Wed Nov 03, 2010 12:56 pm

drednm wrote:What was MGM's last hit film other than the James Bond franchise?

VALKYRIE, technically a United Artists release?

drednm · Post by **drednm** » Wed Nov 03, 2010 1:03 pm

that was a hit? I was thinking Thelma and Louise

Brianruns10 · Post by **Brianruns10** » Wed Nov 03, 2010 2:12 pm

I've always believed that MGMs current woes are karmic payback for what the studio did to the careers of greats like Buster Keaton and John Gilbert.

dr.giraud · Post by **dr.giraud** » Thu Nov 04, 2010 7:33 am

Brianruns10 wrote:I've always believed that MGMs current woes are karmic payback for what the studio did to the careers of greats like Buster Keaton and John Gilbert.

Yet no karmic payback for the sins of Jack Warner and Adolph Zukor?

It's a cold dark universe, friends.

Brianruns10 · Post by **Brianruns10** » Thu Nov 04, 2010 9:00 am

My theory is Warners and Paramount have/are attoning by releasing quality dvd/blu-rays of their classic titles.

The Gods of cinema work in mysterious ways...

Frederica · Post by **Frederica** » Thu Nov 04, 2010 9:43 am

Brianruns10 wrote:I've always believed that MGMs current woes are karmic payback for what the studio did to the careers of greats like Buster Keaton and John Gilbert.

They both might have had a hand in their own downfall.

sethb · Post by **sethb** » Thu Nov 04, 2010 9:50 am

I would be more concerned about how these investment bankers and other corporate sharks would handle and maintain the MGM library, or what's left of it.

Somehow I can't see a big committment to film preservation here (not that some of the previous bigwigs had any better committments). SETH

radiotelefonia · Post by **radiotelefonia** » Thu Nov 04, 2010 5:41 pm

MGM have been doing bad business and failing for the last 40 years. I'm certain that they are going to fail again since they have never bother to learn from their bad decisions. Another successful (?) James Bond concoction, which is not even their original franchise, will be follow by big number of flops and they will soon be back on red ink.

westegg · Post by **westegg** » Tue Nov 16, 2010 8:25 pm

When I was 11 in 1967 I was taken on a tour of MGM. I romped among plastic snowflakes on the set of ICE STATION ZEBRA, saw Shelley Winters during the filming of WILD IN THE STREETS, had the best lunch in the world (roast beef, apple pie), saw a TV war series filmed (RAT PATROL) minus sound effects (big revelation!) and loitered outside the Thalberg Building. Seems like quite a distant dream now!

boblipton · Post by **boblipton** » Tue Nov 16, 2010 9:17 pm

They didn't have the chicken soup with dumplings any more?

Bob

westegg · Post by **westegg** » Wed Nov 17, 2010 7:02 am

I have no recollection of such soup, alas.

I still recall the letter confirming the tour reservation, with its oldtime MGM letterhead. It was like getting a letter from Mt. Olympus!

moviepas · Post by **moviepas** » Fri Nov 19, 2010 5:03 am

Westegg you did well to remember that lunch. I too had lunch there with an exec & two behind the scenes old-times(Buddy Gillespie & JJ Cohn). I don't remember the meal now but I do remember that it was real cheap compared with a lunch I was taken to in London a year or before on business. At least they were paid by my hosts in both cases. Ironically, the London firm is no more after a long history & the MGM when I was there was a different company to the one going under now(and had been for a couple of years or so to date). I don't think my lunch was the cause.

From the point of view of the archive I had wished that Warners had got the business which they tried to do before when Sony got 20% & I believe they tried again this time but I heard little about this until the final decision. Who ever works on the collection can never replace the vault load of footage & tape soundtracks junked when Orion interest or whoever were merging into MGM-UA. Assets are the company & I can never understand execs giving such destructive orders on such assets.

rollot24 · Post by **rollot24** » Fri Nov 19, 2010 11:25 am

Here is NPR's take on MGM' woes
http://www.npr.org/blogs/monkeysee/2010 ... -bond-dead

sepiatone · Post by **sepiatone** » Wed Nov 24, 2010 1:04 pm

Brianruns10 wrote:I've always believed that MGMs current woes are karmic payback for what the studio did to the careers of greats like Buster Keaton and John Gilbert.

*1 what you said

(and Kirk Kerkorian was prolly a Keaton and Gilbert fan growing up!)

sepiatone · Post by **sepiatone** » Wed Nov 24, 2010 1:07 pm

dr.giraud wrote:
Brianruns10 wrote:I've always believed that MGMs current woes are karmic payback for what the studio did to the careers of greats like Buster Keaton and John Gilbert.
Yet no karmic payback for the sins of Jack Warner and Adolph Zukor?

It's a cold dark universe, friends.

or Harry Cohn, go figure!

35MM · Post by **35MM** » Tue Dec 21, 2010 1:16 pm

LOS ANGELES, CA, December 20, 2010 – Metro-Goldwyn-Mayer Inc. today announced that the company’s restructuring has become effective, with exit financing of $500 million in place. The company’s “pre-packaged” plan of reorganization (the “Plan”) was confirmed on December 2, 2010, by the U.S. Bankruptcy Court for the Southern District of New York.

“MGM is emerging from one of the most challenging periods of its storied history. We are honored and inspired at the opportunity of leading one of Hollywood's most iconic studios into its next generation of unforgettable filmmaking, global television production and distribution, and aggressively pursuing, developing and exploiting new digital entertainment platforms,” said Gary Barber and Roger Birnbaum, Co-Chairmen and Chief Executive Officers of MGM. “Beginning today, MGM is a stronger, more competitive company, with a solid financial foundation and a bright future. We look forward to working with MGM’s dedicated employees to build upon this company’s legacy.”

MGM has a significantly improved financial position with secured lenders exchanging approximately $5 billion, including accrued interest and fees, for most of the equity in the company. As part of its exit financing, MGM raised $500 million to fund operations, including production of a new slate of films and television series. JPMorgan arranged MGM exit financing.

Brooksie · Post by **Brooksie** » Tue Dec 21, 2010 5:46 pm

I hope they don't go in the same direction as the Weinstein Company, which is reportedly planning quick sequels to its most successful films of the 1990s in order to make some ready cash. Pulp Fiction II, anybody ???

boblipton · Post by **boblipton** » Tue Dec 21, 2010 5:55 pm

Eh? They've only been releasing pictures since 2004.

Bob

Kelly · Post by **Kelly** » Tue Dec 21, 2010 6:48 pm

I think karma can be real b***h also don't forget they allow United Artisits get bought out by Tom Cruise and Scienlogoy folks

radiotelefonia · Post by **radiotelefonia** » Wed Dec 22, 2010 11:47 am

35MM wrote:LOS ANGELES, CA, December 20, 2010 – Metro-Goldwyn-Mayer Inc. today announced that the company’s restructuring has become effective, with exit financing of $500 million in place. The company’s “pre-packaged” plan of reorganization (the “Plan”) was confirmed on December 2, 2010, by the U.S. Bankruptcy Court for the Southern District of New York.

“MGM is emerging from one of the most challenging periods of its storied history. We are honored and inspired at the opportunity of leading one of Hollywood's most iconic studios into its next generation of unforgettable filmmaking, global television production and distribution, and aggressively pursuing, developing and exploiting new digital entertainment platforms,” said Gary Barber and Roger Birnbaum, Co-Chairmen and Chief Executive Officers of MGM. “Beginning today, MGM is a stronger, more competitive company, with a solid financial foundation and a bright future. We look forward to working with MGM’s dedicated employees to build upon this company’s legacy.”

MGM has a significantly improved financial position with secured lenders exchanging approximately $5 billion, including accrued interest and fees, for most of the equity in the company. As part of its exit financing, MGM raised $500 million to fund operations, including production of a new slate of films and television series. JPMorgan arranged MGM exit financing.

These are no good news because these people are going to repeat the same mistakes that has plagued this company for the last 40 years or more.

MGM should cease to exist.

Chris Snowden · Post by **Chris Snowden** » Wed Dec 22, 2010 7:00 pm

radiotelefonia wrote:These are no good news because these people are going to repeat the same mistakes that has plagued this company for the last 40 years or more.

In this case, emerging from bankruptcy only means that the company no longer owes a fortune to its bondholders (who are now shareholders instead).

Otherwise, it's business as usual, and the same folks who disastrously pinned the company's future on the success of Hot Tub Time Machine can now squeeze out a few more films just like that one, before burying the company for good.

Kelly · Post by **Kelly** » Wed Dec 22, 2010 8:26 pm

What going happen to MGM if they can't get out of bankrutpcy what going happen to TCM movies that were MGM made just at thought what going happen to Digital TV Channel THIS TV network they show good movies on that channel

MGM Studio Files for Bankruptcy

MGM Studio Files for Bankruptcy

MGM lunch