MGM emerges from bankruptcy after raising $500 million, considers NBC’s Jeff Gaspin for final board seat
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Metro-Goldwyn-Mayer’s long nightmare is over.
The studio, which 18 months ago began seeking a way to escape a crippling debt load that reached $5 billion, has exited bankruptcy with new owners and new chief executives.
MGM’s reorganization plan that wiped out its debt, handed over virtually all of its equity to creditors and installed Spyglass Entertainment chiefs Gary Barber and Roger Birnbaum as CEOs was approved by a New York bankruptcy court three weeks ago. However, the company couldn’t complete the Chapter 11 process until it closed on a $500-million line of credit that will be used to fund operations and the production of new movies. That was accomplished Monday.
JPMorgan Chase arranged the financing and previously said in court documents that it would contribute $75 million of its own money to the facility.
As it prepares to restart operations in the new year, MGM is also finalizing its board of directors. With eight people already selected, NBC Universal Television Entertainment Chairman Jeff Gaspin is in talks to take the ninth and final position, people familiar with the matter said. Gaspin, who will soon exit NBC once its acquisition by Comcast Corp. is complete, would join several other experienced Hollywood hands on the MGM board, including former Pixar Chief Financial Officer Ann Mather, former CBS Chief Financial Officer Fred Reynolds and former MySpace President Jason Hirschhorn. Gaspin declined to comment on whether he would join the board.
The other seats are held by representatives of MGM’s largest stakeholders, which previously owned much of its debt. They include Anchorage Capital, Highland Capital Management, Solus Alternative Asset Management and billionaire investor Carl Icahn.
According to its bankruptcy plan, the new MGM will release seven to eight movies a year beginning in 2012. It will also co-finance ‘The Hobbit’ with Warner Bros. and New Line Cinema. The movie begins production this winter. According to previous court filings, MGM will seek a lender to provide the $265 million to $275 million the studio estimates it will owe for its half of ‘The Hobbit.’
In addition to the $500-million credit facility, MGM has built up its cash on hand this year as it halted film production and received forbearances on the interest payments for its debt.
Barber and Birnbaum expect to slim down MGM from more than 400 employees to about 320. They began that process last Friday with layoffs of about 50 employees.
-- Ben Fritz