BusinessWeek – Billionaire Len Blavatnik’s Access Industries may drop out of the bidding for Metro-Goldwyn-Mayer Inc., a person with knowledge of the situation said.
Access Industries, vying for control of the Los Angeles-based studio with Time Warner Inc. and Qualia Capital, hasn’t received a response to its restructuring proposal from MGM or its creditors, said the person, who asked not to be named because the terms are private.
Blavatnik’s departure would remove a potential source of fresh capital for MGM, which put itself up for sale last year after falling behind on $3.7 billion in debt. Turnaround specialist Stephen Cooper, who joined the studio as vice chairman in August, will ask creditors on April 1 for new funds to restructure debt and keep the company independent, said four people with knowledge of the proposal.
Lenders deemed the current offers too low, a person with knowledge of the deliberations said last week. Creditors agreed to extend a moratorium on interest payments through May 14, MGM said in a statement today. The forbearance applies to a $3.7 billion loan and a revolving credit facility.
Cooper is part of a three-member Office of the CEO at MGM, along with production Chairman Mary Parent and Chief Financial Officer Bedi Singh. His plan calls for making as many as 12 films a year, according to one of the people, who sought anonymity because the proposal isn’t public.
The executive is seeking as much as $1 billion, including equity to finance operations and funds for movie production, said one of the people.
Time Warner, Qualia
Time Warner has offered $1.5 billion for MGM, a person with knowledge of the auction said last week. The New York-based parent of the Warner Bros. film studio is seeking to purchase MGM, while the others are proposing to recapitalize the company and keep it independent.
New York-based Qualia has increased the cash in its proposal, according to one person. The company, led by Amir Malin and Ken Schapiro, presented a new restructuring offer on March 19 that adds to the $500 million first offered, according to one person familiar with the proposal.
Malin and Schapiro would serve as co-chief executives of MGM for a limited period, cutting overhead and producing fewer movies, the person said.
Access Industries, based in New York, has said it would provide an undisclosed amount of cash for new production and reduce MGM’s debt, a person with knowledge of the plans said on March 24.
Susie Arons, an outside spokeswoman for MGM, declined to comment.
MGM released one film in 2009 and Hot Tub Time Machine is its sole release this year. The movie cost $36 million to make, according to researcher Box Office Mojo, and grossed $15.6 million in ticket sales its first weekend in U.S. and Canadian theaters.
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