Time Warner emerged yesterday as the front-runner in the race to buy the struggling Metro-Goldwyn-Mayer film studio but, in the best tradition of James Bond, one of MGMs best-known assets, the plot was not quite as simple as it seemed.
Lions Gate Entertainment, itself the subject of an unwanted takeover bid from the activist investor Carl Ichan, and Access Industries, backed by the Russian billionaire Len Blavatnik, were also said to have put in second-round bids for MGM. The offers are understood to be in the region of $1.5 billion (1 billion), far less than the $2 billion that MGMs 140 creditors have been hoping for.
MGM said that it had received a number of bids as part of its ongoing process of exploring strategic alternatives, which include continuing to operate as a standalone entity and evaluating a potential sale of the company. It will now review bids and terms. Time Warner is at the front of the pack, according to The Wall Street Journal.
The studio is burdened with $3.7 billion of debt from a $5 billion 2005 buyout by a consortium of private equity and media groups and has a $250 million revolving credit facility maturing in April. MGM said that it aimed to extend the current forbearance period on its bank debt, which ends on March 31.
Related LinksTime Warner leads pack in race for MGMCarl Icahn makes takeover bid for Lions GateThe company expects to seek a forbearance agreement for its revolving line of credit, for which a payment is due April 8, MGM said. One option said to be under consideration is a pre-packaged bankruptcy, with or without a sale.
MGMs 4,000-title film library generated $450 million in 2008. The librarys most valuable recurring asset is the James Bond franchise.
In a separate move, Lions Gate has rejected Mr Icahns latest offer as financially inadequate.
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