Just a few days ago, Metro Goldwyn Mayer seemed all ready to put an end to its financial situation and once again become a vibrant studio with new owners.
However, a delay in a vote by creditors holding notes totaling more than $4 billion, could mess all that up, bringing Carl Icahn back into the mix.
MGM is delaying the vote on its voluntary bankruptcy restructuring plan to just before Halloween which is expected to exchange debt for equity in the new MGM with Spyglass Entertainment -- one of the production houses behind 2009's "Star Trek" among others -- taking over day-to-day management of the studio. The delay, according to MGM, is meant to give creditors time to explore all the details of financial documentation that was delivered to them. However, others think it's meant to give more time for creditors to consider a last-minute merger offer from Lions Gate Entertainment Corp., the parent company of Lionsgate Studios.
In that deal -- which has the blessing of major Lions Gate investor Icahn, according to CNBC -- a merger between the two studios would give creditors owed $4 billion a 55 percent ownership stake in the new company, which will have added strength from an existing, well-performing library from Lionsgate Studios and Lionsgate Television. It also would have executives from Lions Gate in charge, and not the people from Spyglass, who some say are a bit inexperienced in running large studios.
However, the prepackaged bankruptcy plan with Spyglass would give creditors 95 percent ownership in MGM, rather than a 55 percent take of a combined company.
Icahn has been caught up in legal action with Lions Gate in an effort to control the company, and was against the company's initial plans to purchase MGM, debt and all. However, Icahn seems to be in agreement with Lions Gate on the new proposal, mostly because he would benefit from both sides -- Icahn has been buying up some of the existing debt MGM carries, which means his ownership stake in a combined company could increase significantly.
The creditors waiting for their $4 billion are expected to vote on MGM's proposal with Spyglass on Oct. 29. If that fails, it could signal that creditors instead are more interested in what Lions Gate brings to the table, and that could definitely be a union to watch for.
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