MGM creditors to discuss standalone plan

Fri Mar 26, 2010 6:32pm EDT
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By Jui Chakravorty and Megan Davies

NEW YORK (Reuters) - Metro-Goldwyn-Mayer's steering committee will meet with creditors to present a stand-alone plan for the famed studio next week, sources familiar with the matter said.

Creditors will present the plan in Los Angeles on Thursday after being disappointed with the bids it received, the sources said. The plan, which abandons the idea of a sale of the entire company, involves a mandate to make six to eight movies a year and requires large amounts of capital, the sources said.

It also involves filing for a pre-arranged bankruptcy, the sources added. Such a plan would need approval from a majority of the creditors.

MGM declined comment.

Lions Gate Entertainment, Time Warner Inc and billionaire industrialist Len Blavatnik's Access Industries put in second-round bids for MGM in the last week, with Time Warner putting in the highest bid of $1.5 billion in cash, Reuters had reported earlier.

Lions Gate had decided it would not increase its offer, putting them effectively out of the running, sources told Reuters on Thursday.

That leaves Time Warner and Access Industries, whose offer involves an equity infusion and helping with restructuring the company's $3.7 billion of debt, the sources said.

MGM's vice chairman and a member of its office of the CEO Stephen Cooper knows Access Industries' Len Blavatnik well. Cooper, who was enlisted by MGM to help with the company's restructuring last year, is also vice chairman of the supervisory board of LyondellBasell. Blavatnik is the chairman of that board.   Continued...