EXCLUSIVE: Hollywood should be relieved that this buyer is still alive and kicking even if most of the financial world considers it on life support. I’ve learned from several sources that, any day now, MGM will announce that it will get a thumbs-up “going concern” opinion from the auditors (more below; updates my previous, MGM Fights To Survive. ). Also I’ve learned that private equity fund Qualia Capital LLC’s Amir Malin and Ken Schapiro are out in the marketplace openly discussing the idea of a run at MGM when the time comes. Yes, a lot of folks have kicked the tires, but I agree with Business Week that they are serious players. After all, the industry vets built tiny Artisan Entertainment into something worth selling — including a 6,000-title library — to Lions Gate.

I first reported about the hurdle of this audit of MGM’s activities, especially its TV and movie production slate, back on May 14th when the studio announced it was taking steps to restructure. Faced with $3.7 billion in debt due in July 2012, MGM will pay $250 million in interest alone by April 2010. The big question was if that burden was too much for the studio to bear now that the studio was finally coming clean about its problems. (I’d been hearing for months that MGM debtholders and equity stakeholders had been fighting to the point where both sides were “on a war footing”.) Had the audit gone the other way, then thumbs-down could have triggered covenants forcing MGM to declare itself insolvent and/or repay its massive debt. In short, all hell could have broken loose.

Not to mention leaving production head Mary Parent in the lurch after she’s been holding the studio together with the equivalent of chicken wire by partnering with studios left and right because they are willing to front the costs of each film. She also has been making some of the slate with the money from United Artist’s deal with Merrill Lynch. MGM had been arguing that the best way to maintain the value of the studio’s assets was to stay in the production business. And thus allow the $250M revolver debt due in April 2010 to get replenished from MGM’s revenues like box office.

Also breathing a sigh of relief (if he doesn’t get bounced) is studio topper Harry Sloan who took over the moribund MGM/UA in 2005 after Sony and Comcast and Providence Equity Partners and TPG Capital paid roughly $5 billion in debt and equity to acquire then publicly traded MGM from its majority owner Kirk Kerkorian. Sloan has to live with the fact that he waited until the worldwide credit crisis had begun to try to put MGM on firmer financial footing. Now Goldman Sachs is helping raise more capital. And other investment bankers Moelis & Co have been hired to advise the studio on a potential restructuring and to explore options for optimizing its capital structure — i.e. talking to lenders about altering MGM’s long-term debt obligations). And the Bank Of Montreal has to value whether the 4,000+ title library is worth near what it was when the 2005 deal for the studio was done despite the fall-off of the DVD market. (The studio claims the library throws off half a billion a year.) I’ve said it before and I’ll say it again: Hollywood needs MGM to survive.

Editor-in-Chief Nikki Finke - tip her here.

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