Orion Closer to Pact With Its Creditors : Chapter 11: The studio announces a tentative accord that would raise Kluge’s investment to more than $25 million. Sony, other creditors still must approve it.

Orion Pictures Corp.--bolstered by a fresh financial commitment from its biggest shareholder, billionaire John W. Kluge--announced Thursday that it has reached a tentative agreement with Kluge and some creditors on a plan to reorganize the company.

But significant obstacles to lifting Orion from Chapter 11 bankruptcy protection remain.

The tentative agreement still lacks the approval of Sony Pictures Entertainment, which paid Orion $170 million for foreign distribution rights to 50 Orion films that were not produced. The agreement also does not include Orion’s bank lenders, such as Manufacturers Hanover (now part of Chemical Bank), which is owed $300 million. And it makes no mention of how Orion will distribute its 10 unreleased films.

In its statement Thursday, Orion noted that implementation of the reorganization is subject to conditions, including the approval of “certain Orion creditors.”

A spokesman for Sony, Peter D. Wilkes, said the company would have no comment.

Nevertheless, Thursday’s announcement confirmed the 77-year-old Kluge’s willingness, reported last month by The Times, to pump more money into Orion through his privately held firm, Metromedia Co. According to Orion’s announcement, Metromedia has offered, “among other things,” to assign its interests in the film “Mermaids” to the reorganized Orion, and to give the movie company $15 million in cash.

People familiar with the transaction told The Times on Thursday that the “other things” proposed by Kluge’s Metromedia included unspecified guarantees that would raise the cash value of Kluge’s investment well above $25 million. In exchange, Kluge would receive 50.1% of the equity of the reorganized company. Under Kluge’s plan, Orion would find a distributor for its 10 unreleased films and seek to maximize revenue from its library of 750 films.

“If he’s making guarantees and making assurances that Orion is going to be somewhat viable, this could work,” said Steven E. Hill, a securities analyst with Sutro & Co.

Orion, the studio that made the Oscar-winning films “The Silence of the Lambs” and “Dances With Wolves,” but also piled up $700 million of debts, sought Chapter 11 protection from creditors last December.

Representatives of three distribution companies--MGM, Republic Pictures and Savoy Pictures--that had recently submitted proposals to either acquire or merge with Orion declined to comment on Thursday’s announcement. One of those companies could yet agree to enter a distribution deal with Orion without an equity stake.

The tentative agreement requires the approval of U.S. Bankruptcy Judge Burton R. Lifland, who is overseeing Orion’s status in Chapter 11. A hearing before Lifland is scheduled for June 21 in Manhattan.

“In general, this is a pretty comprehensive plan that’s meant to deal with all the parties involved with Orion’s bankruptcy,” said Wilbur L. Ross Jr., a Manhattan investment banker who advises Orion’s unsecured creditors. “We think it will lead to the re-emergence of a reorganized Orion sometime next fall.”

Ross, whose unsecured creditors include actors Jodie Foster and Kevin Costner, plus bondholders and guild members, said the agreement culminated negotiations that began early Wednesday and concluded Thursday about 7 a.m. EDT.

In a joint statement, the Directors Guild of America, Screen Actors Guild and the Writers Guild of America praised the agreement.

“If the plan is approved,” said the guilds, “this deal will allow full payment of millions of dollars of past due obligations as well as tens of millions of future residuals and participations.”