For the past couple of months, we’ve brought you a variety of stories about the financial difficulties MGM is facing.
The financial woes have led to delays in the new Bond movie and put “The Hobbit” on hold. Fans frustrated by the lack of new Bond or another visit to Middle Earth may be interested to know that the financial issues at MGM could be coming to a head as soon as September 15.
According to the Hollywood Reporter, that’s the date when a forced bankruptcy could be imposed upon the studio. The studio is currently in a restructuring review and is has had six extensions on debt forbearance agreement with its 100-plus lenders. The studio and its shareholders don’t want to declare bankruptcy and be forced to sell off the studios assets–which includes the James Bond franchise. Some speculate that the studio could ask for a seventh extension.
n any case, little more than a month before $400 million-plus in owed debt and interest payments come due, this much is certain: Frustration has never been higher with the more than yearlong effort to heal the ailing Lion.
“It’s kind of become a joke,” said an exec at one of the companies considering a strategic partnership with MGM. “There is a real fatigue among the lenders after all of the forbearance agreements.”
The studio has secured six forbearance agreements, or delays of the deadline for paying principal and interest on its senior bank debt. Strapped by almost $4 billion in total corporate debt, MGM repeatedly has gotten lenders to postpone recoupment of a $250 million revolving credit facility and $200 million or so in related interest payments.
Certainly, the array of possibilities have grown no more appetizing since the Lion fired MGM chief Harry Sloan after a failed months-long search for studio financing. Its more concerted search for restructuring options kicked in the following November, when it formally retained the Moelis & Co. consultancy.
A forced bankruptcy reorganization — like any prepackaged deal — would shift MGM ownership from a current consortium to studio debtholders. But it also likely would spell the end of MGM’s role as a film producer or distributor.
Several major film projects already have been stalled by the studio’s financial ill-health, including the next James Bond pic and two films based on J.R.R. Tolkien’s book “The Hobbit.” Other projects treading water include a planned “Three Stooges” movie and a “Robocop” remake.
Should the studio be forced into bankruptcy court, it still could keep the lights on by shifting money tagged for debt interest payments to administrative purposes. But overhead, including exec salaries in the moribund film-production division, likely would be pared dramatically.
As for the fear of losing control of 007 rights, there is no legal consensus on whether lenders would lose those rights in the event of a forced bankruptcy. But such concern has been enough to force lenders to agree to the half-dozen debt payment extensions.
J.P. Morgan leads a steering committee representing the broader group of MGM lenders, which is also getting advice from the Houlihan Lokey advisory firm.
Skiznot says
I hope this wont end up effecting SG-U. If I have to go through another Firefly level heart break I just may have to give up on TV and go back to only reading for my science fiction. At least most of Season 2 is already in the can.
Jake says
All I give a crap about is Stargate. I want the movies they promised and I want SG-U to thrive.
Kurt in St. George says
Die MGM die! So someone better can takeover your more valuable franchises and do something with them.