subject: MGM studio to file bankruptcy? Will Spyglass deal work for MGM? [print this page] MGM studio to file bankruptcy? Will Spyglass deal work for MGM?
The MGM (Metro-Goldwyn-Mayer) drama is nearing a tragic climax as the MGM studio, the Hollywood icon behind the James Bond series and Pink Panther films is leading to a path of bankruptcy.
There is a sheer amount of ambiguity as far as MGM's bankruptcy filing action is concerned as the studio needs the majority of its 100 creditors to vote for proposers, Spyglass Entertainment and Lions Gate Entertainment, MGM's rival in the entertainment industry, in order to file bankruptcy.
The bankruptcy plan may help MGM reduce its $4 billion debt but the founders of Spyglass Entertainment will take charge of this legendary studio after the deal.
According to the latest updates, Lions Gate Entertainment is suing Carl Icahn's Spyglass Entertainment over its attempt to acquire MGM's film library. Lions Gate believes that Icahn has played a double game and that's unethical.
Along with Spyglass Entertainment, Lions Gate Entertainment was also holding talks with MGM about a possible merger of the two film studios, but no concrete offer was made.
MGM had mentioned that the studio management is seeking lender's votes for the plan, which would engage secured lenders exchanging more than $4 billion debt for more than 95% equity in the studio once it nods for the merger.
The rise of digital entertainment industry has hit these legendary studios adversely.
MGM has struggled with debt after a $2.85 billion buyout in 2005. Several box-office flops and declining DVD sales have dragged the profits down. Amid the trouble of servicing $4 billion debt, cash from MGM's gigantic film library has been falling constantly.
Shares of MGM and Lions Gate have dipped after the melodrama.
MGM creditors are scheduled to vote today on a rival combination bid led by Spyglass Entertainment.
