Saturday
14Nov2009
MGM Given More Time to Get Its House in Order
Saturday, November 14, 2009 at 12:06AM
Earlier this week, it was revealed that MGM was essentially going to be put on the auction block, bringing to an end nearly a century of films released under that banner. The studio has accumulated almost $4 billion-with-a-b in debt, and even though The Hobbit and James Bond might cut into that, both are two full years away and Metro can't even pay the interest on its debt.
"MGM said today its lenders have agreed to extend the forbearance until January 31, 2010. The lenders took this action in support of the Company’s ongoing efforts to develop and evaluate long-term strategic alternatives to maximize value for its stakeholders. MGM appreciates the continued support of its lender group for the process it is undertaking. MGM also said today it is beginning a process to explore various strategic alternatives including operating as a standalone entity, forming strategic partnerships and evaluating a potential sale of the Company."I can't imagine what the bondholders are thinking, as sad as it might seem that MGM is going over the falls in a barrel. How does a company erase $3.7 billion in debt when Red Dawn is the only true upshot on the schedule in 2010? Of course, it's just another month, and solutions that big are hard to company, strategic though they may be. I still think this will end up with MGM changing ownership, probably because the debt is about twice what the company is worth. Someone could get quite a steal with $2 billion or so, taking into account the films that are upcoming in 2011 and the massive catalog.
Colin Boyd | Permalink | in MGM, Studios | Print Article | Email Article | Post a Comment | Share Article
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