MGM Update: Restructuring Plan Becomes Effective

Another MGM Update (12/20) -

MGM Restructuring Plan Becomes Effective

Gary Barber and Roger Birnbaum assume leadership immediately as Co-Chairmen and Chief Executive Officers of MGM.

Los Angeles, CA — Metro-Goldwyn-Mayer Inc. ("MGM") today recently 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.

About Metro-Goldwyn-Mayer Studios Inc:
Metro-Goldwyn-Mayer Studios Inc. is actively engaged in the worldwide production and distribution of motion pictures, television programming, home video, interactive media, music, and licensed merchandise. The company owns the world's largest library of modern films, comprising around 4,100 titles. Operating units include Metro-Goldwyn-Mayer Studios Inc., Metro-Goldwyn-Mayer Pictures Inc., United Artists Films Inc., MGM Television Entertainment Inc., MGM Networks Inc., MGM Distribution Co., MGM International Television Distribution Inc., Metro-Goldwyn-Mayer Home Entertainment LLC, MGM ON STAGE, MGM Music, MGM Consumer Products and MGM Interactive. In addition, MGM has ownership interests in domestic and international TV channels reaching over 130 countries.

For more information, visit www.mgm.com »
________________________________________

Another MGM Update (10/7) -

Spyglass' Birnbaum, Barber Named Chiefs of MGM

By Brent Lang & Sharon Waxman (TheWrap.com)
- October 7, 2010

Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum have been named co-CEOs of MGM pending the studio's prepackaged bankruptcy, a studio spokesperson told TheWrap.

The step was a significant move toward resolving the financial tangle that has enmeshed the debt-ridden studio and paralyzed operations for the past year.

Under the proposal, Barber and Birnbaum's companies would receive close to 5 percent of MGM -- .52 percent for Spyglass plus 4.17 percent toward varying entities -- and take over the company from current CEO Stephen Cooper, who serves with Mary Parent and Bedi Singh.

Most significantly, MGM's lenders moved a step closer to accepting a structured bankruptcy for the cash-strapped studio.

In a meeting with lenders on Wednesday, the Spyglass co-heads walked 100 debt holders through their plan to revitalize MGM's operations and turn the page on its recent financial problems.

The studio announced on Thursday that it had begun collecting votes from its secured lenders on Barber and Birnbaum's proposal.

Their pitch calls for lenders to exchange their claims on the outstanding debt for an approximately 95.3 percent equity stake in MGM once it emerges from Chapter 11. In exchange for contributing certain assets, Spyglass Entertainment gets an approximately .52 percent share of the reorganized company, the studio said.

n addition, two Spyglass affiliates – Cypress Entertainment Group, Inc. and Garoge, Inc. – will merge with MGM. The stockholders of Cypress and Garoge will receive approximately 4.17 percent of the reorganized company.

MGM has a tangled web of creditors, but only holders of secured debt as of Oct. 4, 2010, can vote on Thursday's proposal. They have until Oct. 22 to vote on the plan, but the studio hinted that deadline could be extended.

The bankruptcy would be completed 30 days or so after the vote, meaning that MGM might be free and clear to operate by December.

The pair plan to take the reins once the bankruptcy is complete. Ken Schapiro, of private equity firm Qualia Capital, is reportedly in talks to become chief operating officer once Birnbaum and Barber take over.

In heading one of Hollywood's oldest and most revered studios (the producer of such Golden Age classics "The Wizard of Oz" and "Gone With the Wind"), Birnbaum and Barber can point to a series of successes as independent producers. Among its recent hits, Spyglass co-produced "Dinner for Schmucks," "Get Him to the Greek," and "Star Trek."

Word of the reorganization (which essentially amounts to putting the home of Leo the Lion into receivership) had been leaking out for several weeks, but this is the first time that the studio has publicly shared details.

MGM has been trying to attract a buyer while laboring under some $4 billion in debt for much of the past year. Production has ground to a halt while the studio tried to find a buyer, and the staff has been reduced to a shadow of it what it had been.

In September, MGM asked for and received its seventh reprieve on nearly $450 million in debt and interest payments.

If their plan goes through, Birnbaum and Barber will have succeeded where others have failed.

MGM boasts a library that numbers over 4,100 titles, but it has struggled to attract interest from potential buyers throughout much of the past year. Lionsgate and Len Blavatnik's Access Industries were rumored to be circling the company, and Time Warner also made a $1.5 billion offer.

The studio's financial problems have put production on several high-profile projects such as the next James Bond film and "The Hobbit" in limbo. Filming is expected to gear up with the new leadership.
_______________________________________
(Original report below)

Spyglass Signs Letter of Intent to Take Over MGM Management

By Daniel Frankel (TheWrap.com)
- September 8, 2010

Spyglass founders Gary Barber and Roger Birnbaum have moved closer to taking over Metro-Goldwyn-Mayer, signing a non-binding letter of intent Wednesday to assume control of the venerable studio as co-chairmen and co-CEOs, an official close to MGM confirmed.

The L.A. Times reported that Barber and Birnbaum are courting veteran Hollywood financier Ken Schapiro to join on as COO, if and when they assume control of the nearly bankrupt MGM.

Schapiro is partnered with Amir Malin in the private capital fund Qualia Capital, which last spring proposed restructuring MGM's debt with a cash infusion of $500 million.

Should Schapiro join in, Qualia could help recapitalize MGM after creditors convert nearly $4 billion in debt to equity as part of a pre-packaged bankruptcy.

That cash infusion would allow Barber and Birnbaum to move forward with pre-existing deals for Peter Jackson's "The Hobbit" and the James Bond franchise.

Spyglass would continue to operate independently, while MGM will produce a handful of movies each year, among them Bond and "The Hobbit." In addition, MGM boasts a library that numbers over 4,100 titles.

Should Spyglass take over the company, the current executive team, headed by Mary Parent, would likely exit.

In July, MGM asked for and received its sixth extension on a massive debt repayment. It is currently has until Sept. 15, 2010 to deliver a $250 million principal payment and over $200 million in interest to more than 100 lenders. Many of those lenders were on the conference call with Spyglass on Wednesday.

The debt-strapped studio has received only passing interest since it first went on the market. Lionsgate and Len Blavatnik's Access Industries were believed to have been contenders, but the highest known bid is a $1.5 billion offer from Time-Warner.

Spyglass recently co-produced "Invictus," Dinner for Schmucks," "Get Him to the Greek," "Wanted," and the 2009 film remake of "Star Trek." Spyglass declined comment for this story.

If the deal goes through, it would be an ignominious end for the legendary movie studio, as it essentially amounts to MGM going into receivership. Under Spyglass' proposal, Barber and Birnbaum will get a 4 to 5 percent stake in the company following the restructuring.

About Spyglass Entertainment:
Spyglass Entertainment (website) is an American film and television production company, co-founded by Gary Barber and Roger Birnbaum in 1998. The studio was founded with an investment from European media conglomerates Kirch Group and Mediaset, and a five-year distribution deal with The Walt Disney Company. It is currently owned by Cerberus Capital Management.

Barber and Birnbaum serve as co-CEOs, while Jonathan Glickman serves as the current President of Production. Jeffrey Chernov was once a production executive at Spyglass Entertainment.
____________________________________
(bonus article below)

Why Martin Freeman Would be a Poor Bilbo in THE HOBBIT

By Jeff Sneider (TheWrap.com)
- September 8, 2010

Any movie news coming from the British newspaper The Sun deserves to be met with a skeptical eye, but apparently its recent report that MGM and New Line want Martin Freeman to play Bilbo Baggins in "The Hobbit" isn't far off the mark.

According to The Sun, Freeman had to decline a seven-figure offer due to a scheduling conflict with the BBC series "Sherlock," but Entertainment Weekly reports that the two studios are working hard to accommodate Freeman's shooting schedule, and negotiations are ongoing.

Here's hoping MGM and New Line will reconsider their curious decision. His low-key performance as Tim in the original U.K. version of "The Office" may have been spot-on, but he just isn't especially interesting to watch on the big screen.

He's the reason I didn't rush out to see "The Hitchhiker's Guide to the Galaxy" — and he's the reason I left underwhelmed when I finally caught up with it.

Freeman's just too dry to play an eccentric character like Bilbo, especially for what is expected to be a two-part blockbuster. What's more, Freeman turns 39 on Wednesday, which is a little old for the "Hobbit" role — although Jackson's award-winning VFX team is known to work wonders.

Of course, regardless of who plays Bilbo, "The Hobbit" will be sold on the strength of one name — Peter Jackson. The Oscar-winning filmmaker is expected to return to Middle-earth for the big-budget adaptation of J.R.R. Tolkien's prequel to "The Lord of the Rings." (Ian Holm played Bilbo in Jackson's "Lord of the Rings" trilogy.)

Freeman was previously seen on the big screen in "Love Actually," "Shaun of the Dead," "Hot Fuzz" and Anthony Minghella's last film, "Breaking and Entering."

More DVDTOWN News:
—> Deal Near for 'HOBBIT' Films in 3-D with Peter Jackson Directing » (Oct 3, 2010) - The Hobbit is almost out of movie jail. After months of negotiation and delay, Warner and MGM are on the verge of an agreement that would allow Peter Jackson to begin shooting a 2-part version of J. R. R. Tolkien's "Hobbit" early next year. The first "Hobbit" film is expected to be released in mid-December 2012, the second a year later. Mr. Jackson has said he can direct the films only if those release dates can be met.

—> Blogger says Peter Jackson may direct THE HOBBIT movies » (June 26, 2010) - Two more J.R.R. Tolkien films on the horizon?