Business Week – Metro-Goldwyn-Mayer Inc., the struggling Hollywood studio with the roaring lion as its logo, said Friday it can go two months longer without having to pay interest on its debt as it sells itself to the highest bidder.
MGM, wallowing in about $4 billion in debt, said its lenders agreed to forego interest payments through March 31. The current agreement was to expire Sunday.
The studio is in the process of being sold, and several companies submitted nonbinding bids earlier this month.
Interested parties include Time Warner Inc., News Corp., Lions Gate Entertainment Corp., Relativity Media, Elliott Management and Summit Entertainment.
The studio said it has begun the second phase of its bidding process and “is conducting due diligence with select parties who have submitted bids.”
It said the second phase of the process is expected to run for several weeks.
The eventual winner would gain the right to make new James Bond movies, win half of the rights to the next two “Lord of the Rings” movies based on “The Hobbit” and possibly avert bankruptcy for a studio with some 4,000 movie and TV show titles in its library.
In 2005, a consortium of private equity groups including Providence Equity Partners and Texas Pacific Group joined with Sony Corp. and Comcast Corp. to buy MGM for $5 billion, but its value is estimated to be less than half that now.
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