2ND UPDATE: MGM has just confirmed Deadline’s report that it has formally named Spyglass partners Gary Barber and Roger Birnbaum its new chairmen/CEOs, and the studio has just issued a press release describing its reorganization effort. It appears below. What isn’t answered is whether MGM will be revived as an entity that strips off its distribution and marketing arms, and makes a distribution deal for product that will include the next installment of James Bond. Deadline was first to tell you on June 29 that the reorganization plan called for MGM to reemerge as a production facility. The advantage is saving money on manpower and other costs, but eventually some of that would be wiped out by having to pay a distribution fee to someone else. What is clear is that the recent MGM developments put Mary Parent one step closer to the exit, and already, rumors are making the rounds of where she will land a production deal. I called the offices of Birnbaum and Barber but was told they are prohibited from commenting at this point.
UPDATE: I’m told that MGM will shortly announce Gary Barber and Roger Birnbaum as its new co-chairmen/CEOs, effective once MGM emerges from Chapter 11. They don’t officially take office until MGM emerges from bankruptcy. This is part of the long expected restructuring plan, as MGM brass has begun to solicit votes from lenders to convert 100% of the debut to equity, once they emerge from Chapter 11. The lenders will have until October 22 to vote. There are many holders of secured debt and as of October 4 they are considered secured lenders and are able to vote on the plan. Birnbaum and Barber are back in LA after attending the big New York meeting with debt holders Wednesday. Getting their cooperation is the only way that the studio has a chance to move forward and start functioning.
Metro-Goldwyn-Mayer Inc. (MGM) today announced that it has begun a solicitation of votes from its secured lenders for a pre-packaged plan of reorganization (the “Plan”).
MGM expects to continue normal business operations throughout the restructuring process. The Plan provides for MGM’s employees, vendors, participants, guilds, and licensees to be unimpaired.
The Plan provides for MGM’s secured lenders to exchange more than $4 billion in outstanding debt for approximately 95.3 percent of equity in MGM upon its emergence from Chapter 11. Spyglass Entertainment would contribute certain assets to the reorganized company in exchange for approximately 0.52 percent of the reorganized company. In addition, two entities owned by Spyglass affiliates – Cypress Entertainment Group, Inc. and Garoge, Inc. – will merge with and into a subsidiary of MGM, with the MGM subsidiary as the surviving entity. The stockholders of Cypress and Garoge will receive approximately 4.17 percent of the reorganized company in exchange.
Following the receipt of the requisite consents from secured lenders during the solicitation period, and in order to implement the debt restructuring, MGM intends to commence pre-packaged Chapter 11 cases under the U.S. Bankruptcy Code and seek confirmation of the Plan. Gary Barber and Roger Birnbaum, currently Co-Chairman and Chief Executive Officer of Spyglass Entertainment, would serve as the Co-Chairman and Chief Executive Officer of MGM following the company’s emergence from Chapter 11.
The deadline for the Company’s secured lenders to vote on the Plan is October 22, 2010, unless extended. Only holders of secured debt as of October 4, 2010 under MGM’s April 8, 2005 Credit Agreement will be solicited.
This press release is for informational purposes only and is not a solicitation to accept or reject the proposed Plan of reorganization referred to herein, or an offer to sell or a solicitation of an offer to buy any securities.
EARLIER: MGM brass, and Spyglass partners Roger Birnbaum and Gary Barber are all in New York today, and buzz is building they will announce the next step in the studio restructuring, which is to step into pre-packaged bankruptcy proceedings, which has been long expected. The pre-packaged bankruptcy allows the studio to keep preexisting deals for films like the James Bond series in place, while it restructures in an effort to free up cash and ease its strangling debt to get the studio moving again, possibly as a production entity. Developing.