MGM bid opens today; Reliance Entertainment may enter race news

Discussion in 'International Politics' started by ppgj, Jan 15, 2010.

  1. ppgj

    ppgj Senior Member Senior Member

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    MGM bid opens today; Reliance Entertainment may enter race

    15 January 2010

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    Anil Dhirubhai Ambani-controlled Reliance Entertainment is among the front runners along with Lions Gate, Warner Bros' parent Time Warner, Liberty Media, and Twentieth Century Fox owner News Corp, who are likely to put in a bid for the legendry Hollywood studio Metro-Goldwyn-Mayer Inc. (MGM).

    Non-binding bids for the Hollywood major are due today.

    According to reports, after today's bids, MGM's financial adviser Moelis & Co. will recommend whether to have a second round of bidding or let MGM attempt to restructure its debt on its own.

    If the bids are low or creditors don't agree to forgo some debt, the studio may go for a bankruptcy filing.

    The winner will have to settle it out with a consortium of 140 creditors led by JP Morgan Chase, who expect to collect about $4 billion that they have lent to buy the studio.

    In November, MGM said that it is exploring a potential sale of the company as it struggles to deal with looming debt payments and attempts to come up with a long-term business plan (See: Hollywood's MGM puts itself up for sale).

    A credit default swap auction in October 2009 determined each dollar the company owed was worth just 58.5 cents - valuing it at around $2.36 billion.

    The auction was held to determine how much insurers were required to pay when MGM technically defaulted on its loans by delaying interest payments, under a deal with creditors that lasts through 31 January.

    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 snatch the studio from a possible bankruptcy filing.

    The studio, known for such classics as The Wizard of Oz and Gone with the Wind and the James Bond and Pink Panther series, made only one movie in 2009, a remake of the 1980 musical Fame, because of looming financial troubles and increasing debt.

    A sale would mark the latest change in ownership for a company that has been bought and sold countless times since it was founded in 1924.

    The present owners, a consortium of investors such as Providence Equity Partners, TPG, Sony, Comcast, DLJ Merchant Banking Partners and Quadrangle Group, bought MGM in 2005 for $5 billion from a group including billionaire Kirk Kerkorian.

    Although MGM got plenty of licensing fees and revenue from a library that includes 4,000 movie and TV titles, including such classics as West Side Story and Rocky, the studio failed to create a major new hit
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    With the slowdown in economy experienced during the past two years and decline in DVD sales, MGM finds it difficult to continue producing new movies and making interest payments. Consequently, the value of its library also took a dive.

    Time Warner is expected to make a bid because its movie division already owns the other half of The Hobbit and the entire Lord of the Rings trilogy. It had bid for MGM in the past, and Turner Broadcasting System bought and sold a portion of MGM in 1986, before Time Warner acquired Turner in the late 90s.

    According to unconfirmed media reports, senior Anil Ambani Group officials are in touch with the studio heads of MGM and the bankers in Los Angeles last week.

    Reliance Entertainment is looking forward to enhance its presence in Hollywood beyond its existing tie-up with Steven Spielberg's DreamWorks Studio.

    The Anil Ambani controlled firm made its Hollywood entry in late 2008, amid the subprime mortgage crisis that squeezed the credit market and a growing feud between DreamWorks co-founders Spielberg and David Griffin with Paramount Pictures and its parent Viacom Inc. (See: Reliance Entertainment completes deal with Spielberg's DreamWorks).

    Following this, last year it had struck separate deals with seven Hollywood production houses run by some of the top actors, including George Clooney, Brad Pitt and Tom Hanks (See: Reliance Big Entertainment in new Hollywood deals).

    The Anil Ambani Group firm also had deals with Julia Roberts' Red Om Films and Brett Ratner's Rat Entertainment.

    domain-b.com : MGM bid opens today; Reliance Entertainment may enter race
     
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  3. ppgj

    ppgj Senior Member Senior Member

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    Hollywood's MGM puts itself up for sale

    14 November 2009

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    Legendary Hollywood studio Metro-Goldwyn-Mayer Inc said on Friday that it is exploring a potential sale of the company as it struggles to deal with looming debt payments and attempts to come up with a long-term business plan.

    MGM, whose lenders extended forbearance until 31 January, said its other options include operating as a stand-alone entity or forming strategic partnerships.

    Companies mentioned in media reports as potential buyers include Lions Gate Entertainment Corp, Time Warner Inc, and Viacom Inc. Investment bank Moelis & Co, hired by MGM in May to help refinance its debt, will most likely be overseeing the potential sale process.

    The studio, which has enlisted a restructuring specialist to help turn it around, faces debt obligations of $3.7 billion stemming from its 2005 buyout, plus payments on a $250 million revolving credit facility due April 2010.

    It was purchased from majority owner Kirk Kerkorian for $2.85 billion by a group including private equity firms Providence Equity Partners; Merchant Banking Partners, a unit of Credit Suisse; and Quadrangle Group; and media firms Sony Corp and Comcast Corp. The group also assumed a debt of $2 billion.

    Film financing experts said MGM had been funding operations largely through library cash flow and access to $500 million in financing set up for its United Artists label, which is partly owned by movie star Tom Cruise.

    Movies that are currently in production and projects in the development pipeline will continue, and current leadership will stay in place, reports said.

    In a statement, MGM also said its lenders have agreed to grant the company another respite until 31 January from interest payments on nearly $4 billion.

    MGM's decision, reversing its refusal to sell a year ago, came during a conference call on Friday between restructuring expert Stephen Cooper, now MGM's vice-chairman, and the 140 lenders who are owed some $3.7 billion in bonds maturing in mid-2012.

    The lenders agreed to seek outside investors for a new partnership, investment or sale of part or all of the company. Its most valuable asset is its library of 4,000 movie and TV-show titles including the 'Rocky' series and 'Dances With Wolves'.

    But the company has fallen on hard times and the home video market has shrunk.

    MGM's latest release, a remake of the 1980 musical 'Fame', was panned by critics and quickly vanished from most theatres.

    On Thursday, with rumours swirling of MGM's potential sale, Lions Gate Entertainment Corp vice chairman Michael Burns also said his company was interested in taking a look.

    "They have fantastic franchises like James Bond, they have half of 'The Hobbit.' Of course it's interesting to us," Burns told CNBC's Fast Money.

    MGM was taken private for nearly $5 billion in 2005 by a group led by Providence Equity Partners, Texas Pacific Group, Sony Corp. and Comcast Corp., DLJ Merchant Banking Partners and Quadrangle Group.

    In 2007, MGM made $558 million from its library of titles alone; but since then DVD sales have declined industry-wide, and a large chunk of those sales has likely vanished.

    Besides the bonds, MGM has a $250 million revolving credit facility with J P Morgan due in April.

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  4. enlightened1

    enlightened1 Member of The Month JANUARY 2010

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    A Bollywood movie mogul is planning a takeover of the Metro-Goldwyn-Meyer Hollywood studio in an attempt to become one of the world’s most powerful film bosses. Anil Ambani has struck a series of deals with stars including Brad Pitt, Jim Carrey, Julia Roberts and George Clooney to develop their films.


    By Dean Nelson in New Delhi
    Published: 6:21PM GMT 15 Jan 2010

    Anil Ambani already owns a controlling stake in Steven Spielberg’s DreamWorks studio and has struck a series of deals with stars including Brad Pitt, Jim Carrey, Julia Roberts and George Clooney to develop their films.

    His Reliance Big Pictures company conquered Bollywood by producing the two most successful films of the last year while his current blockbuster, The Three *****s, has broken Indian box office records. He hopes to expand his influence with an ambitious bid for MGM, the Hollywood studio which owns the James Bond franchise. Sources close to Mr Ambani confirmed his interest in acquiring MGM and said it would help him to achieve his ambition to become the world’s most powerful film mogul.

    Mr Ambani, who is married to Tina Munim, a former Bollywood actress, is a controversial but respected tycoon whose empire spans power generation, distribution, insurance, financial services and communications. His company is India’s second largest mobile phone operator.

    He is locked in a bitter feud with his brother Mukesh, the richest Indian, which began following the death of their father, Dhirubhai Ambani, who began his career as a petrol pump attendant and made his fortune producing polyester for the poor. The brothers fought for control of the company, which was eventually divided into two groups.

    Anil Ambani emerged as the world’s greatest loser in the 2008 financial crisis when he lost more than £18 billion. Today his fortunes have revived and his empire is growing once again.

    The acquisition of MGM would bring one of Hollywood’s greatest film libraries under his control and land a series of likely box office hits over the next three years. MGM will release a new James Bond film in 2011, starring Daniel Craig, and two Hobbit films starring Sir Ian McKellen.

    MGM needs a buyer to avoid potential bankruptcy later this year when a series of debts must be repaid. Its current consortium of owners is asking for bids beyond $2 billion, but debts of $3.7 billion mean it is likely to be sold for a lower figure.
     

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