MGM COMEBACK! Exclusive Interview About New $500M Revolving Credit Facility To Retire Debt & Make TV/Movies

EXCLUSIVE: In an exclusive interview after months of near public silence, Gary Barber and Roger Birnbaum just told me that MGM is “definitely a buyer and a significant buyer in creating content”. This is great news for Hollywood which needs more buyers in the entertainment marketplace. What’s more this is a stunning development that MGM which wwas sent into bankruptcy by crushing debt now can emerge free of all bank debt. And that Barber and Birnbaum accomplished paying off the $325M term loan in just one year of what was supposed to be a 5-year time frame. Now the pair plan to grow MGM.

“The financial community has now lent its support to a company that was bankrupt one year ago,” they told me. “Our plan of reorganization set out objectives, which all were achieved in a time frame quicker than anyone expected. That allowed us to pay off our 5-year term loan in one year. It was a lot of hard work. But the fact is MGM has not lost any liquidity. We’ve taken a fixed component of debt off our balance sheet and MGM today has no bank debt. Those days of paying through the nose are gone.

“Not only have we paid off the debt but we have a significant amount of cash on the balance sheet and we now have a full untapped revolving credit facility. The company is now completely unlevered with the ability to explore any opportunities. We have the currency to acquire assets to grow MGM. When we came into the company there were not a lot of project in developments. We started from scratch, and now we have a very interesting slate of pictures. Obviously Bond and The Hobbit led us into this new era. Now that we’ve got more buying power, people may come to us first so we won’t be left at the bottom of the barrel.

This achievement is also a crowning career success for Berber and Birnbaum, who’ve been partnered for 15 years. As part of the restructuring, they contributed certain assets from their Spyglass banner in exchange for stock in MGM. But also through their MGM employement contracts they received stock options. Meanwhile, the three leading shareholders of the new MGM are Carl Icahn, Anchorage capital, and Highland Capital. Here’s the official announcement from MGM on today’s development:

LOS ANGELES, CA (February 6, 2012) – Metro-Goldwyn-Mayer,  Inc has closed a new $500 million revolving credit facility it was announced today by Gary Barber and Roger Birnbaum, Co-Chairman and Chief Executive Officers of MGM. The financing was provided by a group of banks led by JPMorgan Chase and Deutsche Bank. The syndicate also includes Bank of America Merrill Lynch, Royal Bank of Canada,  SunTrust Bank, Wells Fargo, CIT Bank, Union Bank, City National Bank and OneWest Bank.

The credit facility will allow the studio to retire their previous debt while they continue to grow their film and television business, expanding and developing current projects including the films under their partnership with Sony Pictures such as the upcoming “21 Jump Street,” and the latest Bond installment “Skyfall,” as well as the upcoming highly anticipated “The Hobbit: An Unexpected Journey” and “The Hobbit: There and Back Again,” via their partnership with Warner Brothers and “GI Joe: Retaliation” with Paramount. The studio has several other films and television programs in various stages of production and development at this time including films “Robocop,” “Carrie,” “Poltergeist,” and “Punk Farm” and television including “Vikings” and the current “Teen Wolf.”

“A year ago MGM was in bankruptcy and to receive this oversubscribed facility just one year later is proof positive that through careful and efficient business decisions, we have earned the faith of the financial community,” said Barber and Birnbaum. “The operating plan we are employing is working and we are extremely grateful for the vote of confidence from the banks and are increasingly encouraged about the future of our business.”

“The success of this financing further validates investor confidence in the management team and their ability to execute on its business strategy. Market demand was significantly greater than the $500MM issuance, which is a clear indication that the bank market continues to strengthen for the entertainment sector,” said John Miller, Vice Chairman, JPMorgan Chase.

“Co-leadership in this highly attractive financing is Deutsche Bank’s endorsement and continuing support of an
exceptionally strong management team led by two true industry experts, Gary and Roger, and the supportive leadership of an exceptional Board. The over-performance in the past year allowed for this improved financing,” said Brian Mulligan, Vice Chairman, Deutsche Bank.

MGM’s restructuring was made effective in December 2010. As part of its exit financing, arranged by JPMorgan Chase, the studio raised $500 million to fund operations, including production of a new slate of films and  television series.