March 8 : 2010
MGM announces deadline for second round of bidding
In an article posted today by Variety, David McNary reports that MGM has announced March 19 as the deadline for the second round of bids on its assets. He reads this as “a sign that it may be near working out a sale or restructuring.”
After a first round of non-binding bids, MGM invited half a dozen participants to a second round of offers, this time binding. The main contenders that have been repeatedly mentioned as among the bidders are Time Warner and Lionsgate, with Time Warner considered the most likely buyer. MGM is co-producing The Hobbit with New Line Cinema, a subsidiary of Warner Bros. Time Warner has $5 billion in cash from its sale of its cable systems, and Warner Bros. was the top-earning Hollywood studio in 2009. Given that the price for MGM is not expected to go past $2 billion, such a purchase would obviously be feasible.
According to McNary, “MGM is facing repayment of its $250 million revolving credit line in early April and a $1 billion payment on its $3.7 billion debt in July 2011.” During the past few months, the studio’s lenders have suspended interest payments, but that suspension ends on March 31 and is not likely to be renewed a second time.



