Most of the bigwigs left weeks ago, but today MGM began laying off 50 staffers, mostly from the post-production, marketing, and theatrical distribution departments. Once Spyglass Entertainment’s Gary Barber and Roger Birnbaum start running the studio when it emerges from its prepackaged bankruptcy and closes a $500M credit facility to make movies again, MGM said in court papers that its employee roster will number about 320 in 2011.
There’s still no official word. But I’m hearing from 007 insiders that production should start on the next James Bond movie — “Bond 23″ — towards the end of next year for release November 2012. Makes sense since MGM’s future is now sorting itself out what with the pre-packaged bankruptcy getting approval, and Spyglass taking over studio filmmaking, and star Daniel Craig finishing his film commitments. The actor began work on the Hollywood remake of the Swedish original The Girl With The Dragon Tattoo as soon as he completed shooting Cowboys and Aliens in a nifty bit of schedule coordination between two studios and James Bond rights holders Barbara Broccoli and Michael Wilson. Adding to the mix is that yet another James Bond videogame which had been held up because of the uncertainty recently got the go-ahead. Meanwhile, the latest 007 vidgame is for sale this Christmas.
It’s still not clear who will distribute the next bond. Deadline’s Mike Fleming reported last month that, if MGM isn’t a distributor, the next installment of James Bond will be “a jump ball”. Expect Sony (which distributed Casino Royale) to battle it out with Warner Bros and Fox, but Paramount could emerge in the thick of it because of its close relationship with Spyglass over the film reboot of Star Trek and sequel.
The British newspapers also indicate Bond 23 may now be casting. Today’s Daily Mail reports that 007 producer Barbara Broccoli has been to see actor Russell Beale twice in his current West End play Deathtrap. Also, the Shakespearean actor is starring as King Lear for Bond 23 director Sam Mendes in a National Theatre production in 2012. And he’s exec producing Shakespeare’s History Plays for a new BBC TV season that Mendes is also overseeing. Beale told UK newspaper The Independent earlier this year that he’d already dropped a hint to Mendes that “Every actor wants to be in Bond. I’d love to be a baddie.”
LOS ANGELES, CA, November 3, 2010 – Metro-Goldwyn-Mayer Inc. (“MGM”) today announced that it and approximately 160 of its affiliates have filed Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) to seek confirmation of their “pre-packaged” plan of reorganization (“Plan”). MGM has sufficient cash on hand, and the consent of its lenders to use this cash, to fund normal business operations throughout the Chapter 11 process. MGM has filed “first-day” motions seeking immediate Court approval to continue paying its employees, vendors, participants, guilds and licensors in the ordinary course of business during the entire Chapter 11 process, for both pre-petition and post-petition obligations. MGM anticipates that the Plan will be confirmed by the Court in approximately 30 days.
As previously announced on October 29, 2010, MGM’s secured lenders, voting in the Company’s solicitation process, overwhelmingly approved the proposed plan of reorganization. After considering a range of strategic alternatives over the course of the last 15 months, MGM and its secured lenders determined this plan will allow the Company to emerge as a stable enterprise with new leadership at the helm to move MGM forward.
The Plan provides for the Company’s secured lenders to exchange more than $4 billion in outstanding debt for most of the equity in MGM upon its emergence from Chapter 11.
Following the receipt of the requisite consents from its lenders for the Plan, the Company and certain significant consenting
2ND UPDATE: MGM has just issued this statement about the results of the creditor voting:
“Metro-Goldwyn-Mayer Inc. (‘MGM’) today announced that the secured lenders voting in the Company’s solicitation process have overwhelmingly approved its proposed plan of reorganization (‘Plan’). MGM will now move expeditiously to implement that Plan, which will dramatically reduce its debt load and put the Company in a strong position to execute its business strategy. MGM is appreciative of the lenders’ support.”
UPDATE: The creditors have now officially approved the restructuring plan that puts the Spyglass chiefs atop MGM and gets the studio moving again. A statement will be released momentarily. Now, the fun begins. If MGM isn’t a distributor, the next installment of James Bond will be a jump ball. Expect Sony (which distributed Casino Royale to battle it out with Warner Bros and Fox, but watch Paramount emerge in the thick of it because of the close relationship that the studio has developed with Spyglass since that company became co-financier of Star Trek and the followup that is in the works.
Lionsgate has sued its biggest shareholder Carl Icahn, claiming he publicly opposed a merger between the company and MGM then gummed up the process until he could profit substantially from a potential marriage. Lionsgate claims Icahn publicly said he would oppose the merger, only to turn around and secretly buy up a large stake in MGM’s debt…and then push for the merger. ”It turns out that Icahn was misleading Lionsgate and its shareholders all along,” the lawsuit, filed in New York, says. And that “recent developments indicate he was playing a double game. Icahn opposed a merger not because it was bad for Lionsgate but because it was good – so good in fact that he wanted to postpone it until he could buy up as much of both companies as he could.” The suit also says that, “While urging Lionsgate shareholders to support his takeover campaign to ensure that Lionsgate did not pursue what he called a ‘delusional’ MGM transaction, Icahn was quietly amassing a huge position in MGM debt with the undisclosed intention of reaping profits from both sides in an eventual merger.” All of this comes one day before the voting deadline on a proposed prepackaged bankruptcy plan that would see Spyglass Entertainment’s Gary Barber and Roger Birnbaum take over the studio. Just this week, Icahn redoubled his efforts to buy up even more MGM debt in preparation for a Lionsgate merger, so the big unknown is how any …
The long-running drama of MGM should play out by tomorrow when creditors decide whether or not to embrace a restructuring package that puts Spyglass partners Roger Birnbaum and Gary Barber in control or instead give the MGM assets to Carl Icahn and Lionsgate. Elsewhere, Miramax Films, the other endless custody battle, is starting to come together. Reports have former News Corp exec Mike Lang in talks to become CEO, and MGM television coprexy Jim Packer also in discussions to take a post. All this is contingent on the sale of the company by Disney to Filmyard Holdings that takes place at year’s end. That purchase is backed by Ron Tutor and Colony Capital.
Carl Icahn has made another offer to MGM lenders in hopes of thwarting the prepackaged bankruptcy plan and Spyglass deal. He’s now offered to buy $1.6 billion in debt at a premium price of 53 cents on the dollar; last week, he offered to buy $963 million in debt. The offer expires Friday — the voting deadline for the bankruptcy/Spyglass plan that would put Gary Barber and Roger Birnbaum in charge. On Monday, Lionsgate sent a letter to MGM proposing that a Lionsgate-MGM merger, which Icahn now supports, could save about $100 million annually and increase revenues. If Icahn indeed manages to buy up the $1.6 billion, the total amount he would own would give him a majority of the debt. The Spyglass plan would give lenders 95% ownership of the company; a Lionsgate merger would give creditors a 55% equity stake.
In a letter sent to MGM on Monday, Lionsgate said its proposed merger with the studio would amount to $100 million in annual savings while boosting cash flow by $120 million over five years. Documents were also filed with the SEC. Among the details of the proposed merger: The new company would lead to a reduction in staff of about 175 people, or 17% of the combined workforce of the two companies. And a merger between MGM and Lionsgate would lead to the production of 16 movies per year. MGM’s board faces a Friday deadline to vote on a proposed prepackaged bankruptcy plan in which Spyglass Entertainment’s Gary Barber and Roger Birnbaum would be put in charge. Under that scenario, creditors would own 95% of the studio’s equity. The Lionsgate proposal gives MGM creditors 55% of the equity. Last week, Carl Icahn, who supports the Lionsgate plan, offered to buy another $963 million of MGM’s debt.
Calling the proposed Spyglass plan a “presciption for disaster,” Carl Icahn on Thursday offered to buy another $963 million of MGM’s debt. He already owns around $500 million of it, so the sum would make him one of MGM’s largest creditors – with a stake of around 37%. Pending the offer, he would then be in a good position to approve a merger between Lionsgate and the studio, one he now supports. Some of MGM’s creditors are pushing hard for that prepackaged bankruptcy plan that would instead see Spyglass’ Gary Barber and Roger Birnbaum come in and run the studio. As a condition of his offer, Icahn said anyone selling to him must vote against the Spyglass plan; a vote is scheduled for Oct. 29. Icahn also stated on Thursday: “This is the critical decision point for MGM lenders, yet we are being rushed into an extraordinary Prepackaged Plan with limited information and input, on a “hurry up basis” that frustrates any dissent. I hope to defeat this “rush to judgment.”
BREAKING NEWS… UPDATE: She has signed a non-disclosure agreement and therefore can’t talk publicly to the media. But, making no secret that she was negotiating her exit from MGM after taking the job in April 2008, Mary Parent this afternoon is now officially out at the studio where she was Chairman of the Motion Picture Group and Co-CEO. It’s a sad ending to Parent’s struggle to revive the debt-ridden cash-strapped studio and get it producing and distributing movies again against huge odds. That she was able to accomplish anything at all, even a few releases and co-productions, is testament to her professionalism and personality. Hollywood needs to salute her.
Parent and her staff, meanwhile, has had to go into the Century City offices every day for months and basically do nothing. “A really good group of people came in here to sit on the bench in their prime. What wasted capabilities and wasted potential,” she has told pals. In private conversations with Hollywood, she called it “a perfect storm against us” of events that sank her management team. She’ll probably catch her breath before thinking about another job. (The offers are just coming in now.) In the end, she like everybody else puts all the responsibility for the studio’s demise on Harry Sloan and his inability to tell the truth. ”In a weird way, it’s like coming off a bad relationship,” she told a friend Friday. “I married the wrong guy and woke up pregnant.” (see below for more)
Lionsgate is making its argument for a merger with hobbled studio MGM, a move that is supported by Carl Icahn, who has been trying to take over the mini-major while simultaneously buying up MGM debt. The timing is meant to provide an option for the current restructuring plan that will be voted on by MGM lenders this month. That plan would revive the Lion most likely as a production entity without distribution and marketing, headed by Spyglass chiefs Roger Birnbaum and Gary Barber. I’ve always thought the plan before creditors right now is an interim step, and that an alignment between the Lion and Lionsgate, or a studio like Warner Bros will happen down the road regardless, once the studio gets moving again on The Hobbit and James Bond. Here is Lionsgate’s release:
SANTA MONICA, CA, and VANCOUVER, BC, October 13, 2010 — Lionsgate (NYSE: LGF) (“the Company”), the leading next generation studio, today emphasized the value creation potential of its proposed merger combination with Metro−Goldwyn−Mayer Studios Inc. (“MGM”). The Company filed an Amendment to Schedule 14D-9 with the Securities and Exchange Commission yesterday disclosing that it sent an October 11 proposal to MGM regarding a potential business combination between the two companies. Under the terms of the proposal, the combined company would be owned by shareholders of Lionsgate and creditors of MGM.
“This is a unique, once in a lifetime opportunity to create a dynamic, forward-looking studio that unlocks
Below is Carl Icahn’s statement from this morning expressing his support for a proposed Lionsgate/MGM merger. Late Monday, Lionsgate sent a proposal to MGM expressing support of a ”business combination” after what it called “detailed” discussions with Icahn. All of this after rebuffing Icahn’s attempts for so long. This latest development comes just days after MGM said it was planning a merger with Spyglass wherein Gary Barber and Roger Birnbaum would be the new bosses.
“We are holders of significant positions in both Lions Gate stock and MGM debt. Today, Lions Gate has made a proposal to combine these two companies. We believe that this combination of Lions Gate and MGM would enhance value for all constituencies and we believe this proposal as submitted is far better for MGM holders than the current proposal to combine MGM with Spyglass. In addition, we also believe such a combination transaction would enhance the value of Lions Gate shares. However, we intend to continue to pursue our lawsuits regarding Lions Gate’s recent dilutive transaction with Mark Rachesky. Whether or not we prevail in those lawsuits, we intend to continue to support a combination of Lions Gate and MGM. Our support for this combination is conditioned on the combined company having satisfactory corporate governance provisions.”
EXCLUSIVE: Despite the speculation that India conglomerate Sahara India Pariwar might swoop in and buy MGM for $2 billion, it doesn’t sound like MGM’s current management is taking it that seriously. At least not based on this internal memo I just obtained:
We wanted to take this opportunity to provide you with an update on the Company’s restructuring efforts. Recently we announced that our lenders have again agreed to extend the forbearance period relating to certain of our debt obligations and we are appreciative of their ongoing support throughout this process.
We recognize that throughout this restructuring process, there has been a great deal of speculation about the Company’s future in the media and elsewhere which can be very distracting. We appreciate the focus, hard work and dedication you all have demonstrated for the last year. We can assure you we are working to bring this process to a conclusion as quickly and thoughtfully as possible. However, the process is still evolving and we appreciate your understanding that there are not a lot of definitive answers at this stage.
In the latest evolution of this process, we have entered into a nonbinding letter of intent with Spyglass Entertainment’s Gary Barber and Roger Birnbaum to become the co-chairmen and co-chief executive officers of MGM upon consummation of a restructuring. We believe this development is a constructive step toward concluding this process. The Company will be working with Messrs. Barber and Birnbaum
I’m still on vacation but can’t escape those beleaguered MGM announcements. The studio said today its lenders agreed to extend the forbearance period and therefore will not seek remedies in connection with the nonpayment of interest and principal due on the company’s bank debt, including the revolving credit facility, until October 29, 2010. “The lenders took this action in support of the Company’s ongoing efforts to evaluate long-term strategic alternatives to maximize value for its stakeholders. MGM appreciates the continued support of its lender group throughout this process.” The studio is going through a pre-packaged bankruptcy before Spyglass takes over.
MGM creditors will be asked to approve a restructuring and pre-packaged bankruptcy plan for the studio within the next week or two, Bloomberg reports. This follows Spyglass chiefs Roger Birnbaum and Gary Barber’s signing non-binding letters of intent on Wednesday to become MGM co-chairmen/CEOs. So this next step of a pre-packaged bankruptcy proceeding has been expected for months. It would convert debt to equity and remove the $4 billion debt which has crippled the studio so that it can start generating films again. According to Bloomberg, Birnbaum and Barber would receive 5% of the merged company for their film library, valued at $100M.
As expected, the MGM ownership situation is getting closer to being sorted, and it won’t be long before the Lion has a chance to roar again. Or at least emerge from its cage. Spyglass chiefs Roger Birnbaum and Gary Barber have signed non-binding letters of intent that will make them MGM co-chairmen/CEOs. That leads to the next step, which is a pre-packaged bankruptcy proceeding that would convert debt to equity, removing the $4 billion albatross from around the Lion’s neck so that it can start generating films again. The prepackaged bankruptcy allows the company to be restructured while it freezes existing deals for franchises that include the James Bond series and The Hobbit.
The LA Times reports that the Spyglass guys are already looking past this hurdle, and are talking with Ken Schapiro about coming aboard as COO. He’s a vet of Qualia Capital, which was among the entities that kicked the tires on MGM before management decided to go with Birnbaum and Barber, who are expected to make projects but will likely eliminate the studio’s marketing and distribution arms and set the projects up elsewhere. All this means that The Hobbit, with Peter Jackson at the helm, can move forward, with co-financing partner Warner Bros distributing the two films worldwide.
“Summit is pulling out because the process has gone on way too long and it’s become a distraction for the business,” an insider tells me this morning. Summit toppers Rob Friedman and Patrick Wachsberger are still in acquisition mode, and the company will continuing looking for good deals in what is a very depressed showbiz marketplace where bargains are plentiful — especially film and TV libraries. The fundamental issue which MGM creditors had with Summit is that they would have had to give up too much equity in order involve the mini-major which remains flush with cash thanks to the Twilight franchise. “I’m not sure that Summit bowing out changes the Spyglass situation,” my insider added. For months now, Hollywood has known that Spyglass is the bigger creditors’ frontrunner to control MGM, which seems finally poised to plunge itself into a prepackaged bankruptcy, and then emerge with Spyglass partners Roger Birnbaum and Gary Barber starting production for the studio. But Summit has remained very much under consideration and hadn’t heard they’re out of it — at least not yet. So Summit decided to pull the plug on its own.
This lead group of MGM creditors (Anchorage Advisors, Highland Capital Management, and Davidson Kempner Capital Management who have banded together) would have Spyglass plan transform MGM into a pure production company and close down its marketing and distribution divisions. Coupled with the equity that Spyglass would bring to the table, a streamlined MGM would lower its debt and have a shot at …
EXCLUSIVE: Now that Spyglass has emerged as the favorite to steer MGM’s future fortunes — although Summit insists it’s not out of the running yet and Lionsgate is in merger talks — more details are emerging about MGM’s possible future. Insiders tell me that the Spyglass plan would transform MGM into a pure production company and close down its marketing and distribution divisions. That would certainly cut costs in the short run. Coupled with the equity that Spyglass would bring to the table, a streamlined MGM would lower its debt and have a shot at raising new funding to finance its own pictures. That would let Spyglass partners Gary Barber and Roger Birnbaum do what they do well, which is to lower risk by making domestic and offshore distribution deals.
But I see the downside of this plan. MGM would have to pay others to distribute and market its films — and those fees could be comparable or higher than the monies saved on overhead. I’m told that rival Summit and Lionsgate proposals would maintain MGM as a studio because both companies have distribution divisions. The Spyglass move would mean yet another morphing of MGM over the recent past. Under Harry Sloan, the revived studio started off as a distribution rental system for films by financiers like Sidney Kimmel and The Weinstein Co, a strategy that didn’t work.