Spyglass near to closing a deal with MGM

[Blowfeld]

MGM Studio's Lenders Said to Plan Vote on Debt Restructuring, Bankruptcy
By Ronald Grover and Michael White - Sep 10, 2010

Metro-Goldwyn-Mayer Inc. creditors will be asked to approve a restructuring and pre-packaged bankruptcy plan for the studio within the next week or two, according to two people with knowledge of the situation.

Under the plan, MGM would file for Chapter 11 bankruptcy after obtaining creditor approval, with the goal of emerging from court protection by the end of the year, said one of the people, who asked not to be named because the details aren’t public. Susie Arons, an MGM spokeswoman, declined to comment.

The studio, which has $3.7 billion in debt and is nearing the end of a sixth forbearance agreement, would hand over management to Spyglass Entertainment Group’s Gary Barber and Roger Birnbaum, the people said. Spyglass signed a non-binding letter of intent on Sept. 8, according to the people.

As part of a restructuring in bankruptcy, creditors would exchange their debt for equity. Spyglass owners would receive 5 percent of the merged company for their film library, which has been valued at about $100 million, according to one of the people, who has seen the proposed agreement. The studio’s latest forbearance agreement expires on Sept. 15.

Spyglass, a Los Angeles-based production company, is the producer of “The Sixth Sense” and “G.I. Joe: The Rise of Cobra,” and owns a library with interests in 45 films, according to its website. Spyglass didn’t respond to request for comment today.

MGM, also based in Los Angeles, is preparing for a conference call with lenders that would precede an e-mail vote among the more than 100 creditors, one of the people said.

Credit Line

The restructuring plan also would allow closely held MGM to seek a line of credit to fund its operations and avoid having to raise additional equity beyond what would be created through the debt swap, said one of the people, who has taken part in the discussions. The studio was taken private for $5 billion in 2005 by investors including Providence Equity Partners.

Metro-Goldwyn-Mayer’s primary assets are its library of 4,100 films and a 19 percent stake in the Epix pay television channel co-owned with Viacom Inc. and Lions Gate Entertainment Corp. MGM values the stake at about $95 million, following an Aug. 10 agreement with Netflix Inc., one of the people said.

Under that accord, Netflix will pay $200 million annually over the next five years to give its subscribers Web streaming access to the pay channel’s movies and TV shows.

MGM also shares film rights to the James Bond movies and J.R.R. Tolkien’s “The Hobbit.” MGM is considering hiring another studio to handle distribution of its films to theaters, one of the people said. News Corp.’s Twentieth Century Fox already distributes its DVDs.

Under the restructuring plan, Spyglass’s Barber and Birnbaum would become co-chairmen and co-chief executives, the people said.

Ken Schapiro, of the New York-based private equity firm Qualia Capital, is in talks to become chief operating officer of MGM, one person said. Qualia made a restructuring proposal for MGM this year that included a $500 million equity infusion.

Paul Pflug, a spokesman for Qualia, said neither the company nor Schapiro would comment.

This story can be found at http://www.bloomberg.com/news/print/201 ... uptcy.html

[Blowfeld]

Don’t mark your calendars just yet, but it looks like The Hobbit and the next James Bond film may be getting back on their feet. As we previously reported, MGM’s financial difficulties had put both their flagship franchises into limbo. However, in last month we learned that Spyglass Entertainment was in the process of making a deal to erase MGM’s debt and take ownership of the troubled studio.

Regarding The Hobbit, Ian McKellen told The Bolton News [via /Film] that he was set to reprise his role as Gandalf in January. This is coupled with the news that MGM and New Line are actively in the process of trying to sign Martin Freeman to play Bilbo Baggins. Hit the jump for the good word regarding 007.

In their story about Gary Ross being in talks to direct The Hunger Games, Deadline mentions that Sam Mendes dropped out of the running “because the MGM picture is clearing up and it looks like production on 007 could begin by late summer or early fall, 2011 with Mendes at the helm and Daniel Craig back in the Aston Martin.” If MGM is indeed going again, then this is all great news and these 2011 start dates could put The Hobbit and Bond 23 both on track for a 2012 release.

Links
http://www.collider.com/2010/09/14/the- ... nd-23-mgm/
http://www.theboltonnews.co.uk/news/dis ... s_Gandalf/
http://www.collider.com/2010/09/08/mart ... he-hobbit/
http://www.collider.com/2010/09/14/gary ... ger-games/
http://www.deadline.com/2010/09/gary-ro ... ssignment/

Mendes, for instance, bowed out of contention last Friday, and I’m told it was because the MGM picture is clearing up and it looks like production on 007 could begin by late summer or early fall, 2011 with Mendes at the helm and Daniel Craig back in the Aston Martin.

[Blowfeld]

I do like Martin Freeman for Bilbo.
I still don't see how this is clearing up as nothing is signed and they are going to blow the 2011 (& 2012) budget on The Hobbit.

[Blowfeld]

aaand we’re back with another maybe-accurate report on plans for The Hobbit, courtesy of Sir Ian McKellen. This latest ‘news’ comes via statements the actor made to The Bolton News, to which he said he is definitely returning as Gandalf, and that “the aim is to start filming in January.” Last time we heard anything from the actor he sounded quite frustrated about the delays experienced by the film, and suggested that he might not be able to wait around much longer.

So what changed? For one, Spyglass Entertainment has made moves to take over MGM and restructure the studio, the short-term goal being to recapitalize and get two film projects rolling. Specifically, The Hobbit and a new James Bond film.

Meanwhile, in Deadline’s report about The Hunger Games, there’s a little nugget of Bond rumor. One of the directors on the shortlist for The Hunger Games was Sam Mendes, but Deadline says that be “bowed out” at the end of last week because MGM’s situation is sorted out ot the point where ” it looks like production on 007 could begin by late summer or early fall, 2011 with Mendes at the helm and Daniel Craig back in the Aston Martin.”

That’s still rather far off, but that’s a very vague vote of confidence in the Bond situation and in MGM’s state in general, as Spyglass Entertainment prepares to take control of the studio. A January start date for The Hobbit seems rather optimistic at this point, but not out of the realm of possibility. A late summer / early fall beginning for Bond 23 could very well be on the proper timeline, as that would give Spyglass time to sort out MGM and then have the studio and EON Productions get back into proper development on Bond.


Read more: MGM: The Hobbit to Start in January? Rumors of Bond’s Return Begin to Circulate | /Film http://www.slashfilm.com/2010/09/14/mgm ... z0zYVKvymj

[Blowfeld]

Business Update on KPCC
Mark Lacter • September 14 2010 2:10 PM

My weekly business chat with KPCC's Steve Julian looks at the possible bankruptcy filing by MGM and whether the storied movie company has a future. Also, does the Hollywood Reporter's decision to scrap a daily edition become a model for other publications, even newspapers? Available at KPCC.org and podcast (Business Update with Mark Lacter). Transcript is after jump.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, is MGM ready to file for bankruptcy?

Mark Lacter: It's looking that way Steve, although this would be one of those pre-packaged bankruptcies where all the restructuring is done ahead of time and creditors don't have to fight in bankruptcy court. Now if everything goes according to plan, a big if, MGM would come out of bankruptcy by the end of the year, at which point the operation would be taken over by the production company Spyglass Entertainment. The creditors would exchange the money that's owed them for an stake in the new MGM.

Julian: What would that get them?

Lacter: Unfortunately, not much. The new MGM would be a shell of its former self (staff would be drastically cut, they're talking about 200 or more positions) and domestic distribution of movies would be outsourced. Frankly it's amazing that the place is still standing, considering how many times it's been bought and sold over the years and how much debt has piled up. All that's really left are the film rights to the James Bond movies and MGM's film library, but that's not nearly enough to cover the billions of dollars that it owes.

Julian: Is the problem just debt?

Lacter: The problem is that MGM only does movies and not even many of them. The other studios became parts of much larger corporations (Time Warner, Viacom, News Corp.), and those corporations could provide financial support if the studios had a down year. Actually, many of the standalone movie companies are having a tough time - it certainly was an issue in the sale of Miramax. Steve, Investors are just shying away from the movie business, which will be a problem for MGM, even if the bankruptcy plan goes through. That's because after the company settles its debt obligations, it still has to borrow still more money in order to make movies - and good luck in this market trying to find investment money.

This story can be found at http://www.laobserved.com/biz/2010/09/b ... on_k_9.php

[Mazer Rackham]

Nothing has happened yet. Sam Mendes dropping out of anything becuase he believes MGM is about to hire him is crap. Far too kind assessment of what is really happening with him. The Hobbit will get the go first, if they stick with the status quo MGM will need over $300m for Bond. They don't have it and will not be able to raise it quickly (they could farm out the funding but it wouldn't be in MGM's best interest to forfeit the possible profit). The Hobbit needs to be a success to help Bond get off the ground. However the real problem is the clumsy nature of EON, a lot of entropy to defeat getting Bond started. At best of times EON is a lumbering dinosaur. I think there will be clash of personalities as MGM has new leadership and new goals to met. The Eon Graft ($30m +) will be under the microscope.

Something could happen to make Bond 23 fast track but it is the one property MGM can sit on, bringing it back whenever they want or possibly sell it off if it doesn't work out. We need to see what actually happens and how much funding MGM has when they emerge out of this, what kind of distributor relationships, etc. Most importantly how much MGM has to fork out to get The Hobbit rolling, I suspect it will take up most of the $500m rumored working capital when they emerge form his. Even if it doesn't I doubt MGM will have the $300m sitting around to fund a Bond. Now if they went Bond first then Hobbit maybe, but the reality is the Hobbit is the most pressing.
What makes sense is fund the Hobbit and while they are waiting for the release of the first movie fund a lot of small movies and hope for a sleeper hit.

I think 2013 or 2014 will be more likely for Bond. Anyway it'd be hard to pick a good release date for Bond 23 in 2012 at this point.

Code: Select all

May, 2012
May, 4 	The Avengers 	Paramount Pictures 	 
 
May, 18 	Battleship 	Universal 	 
 
May, 25 	Madagascar 3 	Paramount Pictures 	 

June, 2012
June, 8 	John Carter of Mars 	Walt Disney Pictures 	 
 
June, 29 	Star Trek 2 	Paramount Pictures 	 
 
TBA 	King of the Elves 	Walt Disney Pictures 	 

July, 2012
July, 3 	Spider-Man 4 	Sony Pictures 	 
 
July, 20 	Batman 3 	Warner Bros. 	 

November, 2012
November, 2 	The Guardians 	Paramount Pictures 	 
 
November, 16 	Monsters, Inc. 2 	Walt Disney Pictures 	 
November, 16 	The Twilight Saga: Breaking Dawn, Part 2 	Summit Entertainment 	 

To Be Announced 2012
TBA 	The Hobbit 	Warner Bros. 	 
TBA 	Tintin 2 	Paramount Pictures 	 

To Be Announced 2013
TBA 	The Hobbit Sequel

[Blowfeld]

Happened across this;

Indian Conglomerate in Talks About MGM Bid

Indian conglomerate Sahara India Pariwar is in discussions about buying the debt of struggling film studio Metro-Goldwyn-Mayer for $1.5 billion to $2 billion, according to two people familiar with the matter.

The sources did not elaborate on Sahara India Pariwar's plans for MGM, which has about $4 billion in debt, and stressed that the talks were still at a preliminary stage.

"On mutual interest discussions are on but it's too early to comment on the issue," said Abhijit Sarkar, corporate communications chief of Sahara India Pariwar, which owns businesses in media, entertainment, real estate and insurance.

MGM could not immediately be reached for comment.

Earlier this month, MGM said that it won extra breathing room to make its debt payments, with its lenders agreeing not to seek remedies for nonpayment of debt until October 29.

One source told Reuters that Sahara India Pariwar was contemplating a nearly $2 billion, all-cash deal for MGM's debt. Another source pegged the deal at roughly $1.5 billion.

MGM has a film library that includes the James Bond and Pink Panther franchises, but it has been struggling to create new hits. It is also coping with plunging DVD sales as consumers move to viewing online.

The studio is saddled with debt from a $2.85 billion buyout in 2005 by a group that included private equity firms Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, and media companies Sony Corp and Comcast Corp.


http://abcnews.go.com/Business/wireStory?id=11672479

[Kristatos]

Happened across this;

Indian Conglomerate in Talks About MGM Bid

Isn't this just the old "Bollywood Bond" story, risen from the grave?

[Goldeneye]

Happened across this;

Indian Conglomerate in Talks About MGM Bid

Isn't this just the old "Bollywood Bond" story, risen from the grave?

Doesn't look like it is.
http://www.bloomberg.com/news/2010-09-2 ... tudio.html

The Broccoli family, producers of the James Bond movies and co-owners of the franchise with Metro- Goldwyn-Mayer Inc., are involved in Sahara India Pariwar’s $2 billion bid to buy the debt-laden studio, said a person with knowledge of the offer.

Barbara Broccoli and her stepbrother Michael G. Wilson are part of the Sahara India offer and would receive an undisclosed equity stake in MGM if it succeeds, said the person, who sought anonymity because the discussions are private.

It wasn’t clear whether Broccoli and Wilson would have a management role in the Los Angeles-based studio, the person said. Sahara India, based in Lucknow, offered $2 billion for MGM’s more than $3.7 billion in debt, the Associated Press reported on Sept. 17.

The overture comes as MGM’s creditors are scheduled to vote this week on a pre-packaged bankruptcy plan to restructure the company’s debt by converting it to equity in a merger with Hollywood producer Spyglass Entertainment. Sahara India has interests in finance, infrastructure and housing, media, consumer products, manufacturing and services, according to its website. Its entertainment operations include cable-television channels, film production and cinema chains.

The talks involve Sahara India’s “mutual interest” with MGM, Abhijit Sarkar, head of corporate communications at Sahara India Pariwar, said in an e-mailed statement yesterday. He declined to add to the statement today, saying “it’s too early to comment on the issue.”

Susie Arons, an outside spokeswoman for MGM, declined to comment, as did Stephanie Wenborn, a spokeswoman for the Broccolis’ London-based EON Productions.

Creditor Vote

Under MGM’s pre-packaged bankruptcy plan that creditors will vote on, Spyglass Entertainment co-chairmen Gary Barber and Roger Birnbaum, who produced “The Sixth Sense” and “Seabiscuit”, would operate the studio and swap the rights to their film library for a 5 percent stake in the new company.

On April 19, EON Productions, the James Bond production company controlled by Broccoli and Wilson, said they would suspend development on the next instalment in the 007 series, which was previously scheduled for release in late 2011.

“Due to the continued uncertainty surrounding the future of MGM and the failure to close a sale of the studio, we have suspended development on Bond 23 indefinitely,” EON said then in a statement.

EON has produced 22 Bond films since 1962. Broccoli and Wilson have run the studio since 1995, when they took over from the late Albert “Cubby” Broccoli, who initially controlled the franchise rights. The family owns a 50 percent stake in the franchise, with MGM’s United Artists studios owning the other 50 percent. EON controls the merchandise rights while the studio handles film-related distribution.

Broccoli and Wilson asked Time Warner Inc.’s Warner Bros. film unit to stay involved in the MGM bidding, people with knowledge of the situation said in May. A $1.5 billion bid by Time Warner was rejected as too low, people with knowledge of the matter said in March.

[Blowfeld]

What is it with Wilson and Broccoli trying to sink MGM? (Is there no honour among thieves ?)
I thought the Spyglass deal was going through and the studio would be on it feet by early 2011.

The news has it that Bond 23 was going to start next summer, if we can believe the headlines A wink and a nod there, we know as was explained to us that the news was based on one man's off handed comment on a situation to which he has no actual knowledge.

I can not understand why Broccoli and Wilson are going behind MGM's back and trying to make a deal with their competitors, why not buy up the bad debt themselves if control is what they want.

[katied]

God I hope the Gruesome Twosome's going behind MGM's back backfires on them. Karma is a b!tch!

[JackWade CIA]

Talk about out of the blue. Why on earth would they pull a stunt like this now. It was almost over! Jesus!

[katied]

Sounds like self-sabotage on their part.

[James]

Eon have put out a press thingy denying the Bollywood link or whatever. With any luck this confusion and delay will continue for a while yet.

[katied]

Eon have put out a press thingy denying the Bollywood link or whatever. With any luck this confusion and delay will continue for a while yet.

Big surprise that they are denying it.

[Dr. No]

What is happening again? Somebody else put a last minute bid in and said The Bond family was part of it?

You know what never mind. I don't care. I'll wait for when it's all over.

[Blowfeld]

Bloomberg is usually pretty good, however here are the most recent updates;

Bond Movie Producer EON Says It's Not Part of Sahara's Bid for MGM Studio
By Kristen Schweizer - Sep 20, 2010 12:00 PM CT

EON Productions, producer of the James Bond movies, said it isn’t involved in Sahara India Pariwar’s bid for Metro-Goldwyn-Mayer Inc., the debt-laden Los Angeles film studio.

“EON Productions tonight confirmed they have never had any contact with Sahara India Pariwar and are in no way involved in the Sahara India Pariwar bid for MGM,” spokeswoman Stephanie Wenborn said in a statement.

London-based EON, co-owner of the Bond franchise with MGM, is involved in Sahara India’s bid, a person familiar with the matter told Bloomberg News earlier. EON is run by Barbara Broccoli and her stepbrother, Michael G. Wilson.

Sahara India, based in Lucknow, offered $2 billion for MGM’s more than $3.7 billion in debt, the Associated Press reported on Sept. 17.

This can be found at Bloomberg News

MEMO: MGM Not Veering From Spyglass
By MIKE FLEMING | Monday September 20, 2010 @ 3:47pm EDT

To All Employees:

We wanted to take this opportunity to provide you with an update on the Company’s restructuring efforts. Recently we announced that our lenders have again agreed to extend the forbearance period relating to certain of our debt obligations and we are appreciative of their ongoing support throughout this process.

We recognize that throughout this restructuring process, there has been a great deal of speculation about the Company’s future in the media and elsewhere which can be very distracting. We appreciate the focus, hard work and dedication you all have demonstrated for the last year. We can assure you we are working to bring this process to a conclusion as quickly and thoughtfully as possible. However, the process is still evolving and we appreciate your understanding that there are not a lot of definitive answers at this stage.

In the latest evolution of this process, we have entered into a nonbinding letter of intent with Spyglass Entertainment’s Gary Barber and Roger Birnbaum to become the co-chairmen and co-chief executive officers of MGM upon consummation of a restructuring. We believe this development is a constructive step toward concluding this process. The Company will be working with Messrs. Barber and Birnbaum over the coming weeks to pursue the proposed arrangement so you may notice some new faces in the building. If, and when, there are meaningful, definitive updates from this process we will let you all know.

Please remember that this information is confidential and it is inappropriate to discuss these matters with non-MGM personnel.

Sincerely,
Steve, Mary and Bedi

This story can be found at MGM Not Veering From Spyglass

[Blowfeld]

Althou Bloomberg's original claim is Barbara Broccoli and her stepbrother Michael G. Wilson were involved not EON. So maybe there was something to it.

[oscartheman]

Does this mean Barbara and Craig are not pooling their money to buy MGM?Pity!

[Dr. No]

The only thing I think Eon bidding on MGM would do is slow things down. I know the government says the recession ended last year but I don't see it. I think we are about to hit another rough economic time, MGM needs to get out of this limbo before rough times hit. I still doubt craig will be back, he is having far too good a time making movies he likes, by 2012 if that were to happen I strongly suggest a reboot or recast if reboot is to strong a term fro them. get a young man this time, If they had cast pierce in 1987 as the had planned he would have been there for a damned long time, same if they had gotten dalton in 1969. It would be nice to have fresh young face to go with bond, maybe a guy how can smile. (a dalton has a great smile why didn't they let him use it, he is funny as hell in some of his mvoeis after bond, a little mix of humor would have gone a long way,)

Enough of the linebacker in a suit scowling at the camera.