As MGM gets yet another extension on having to pay back its lenders--until March 31--it shows that finally it is in the interest of investors to keep the company afloat. The same thing is behind the Weinstein Co.'s new lease on life, as its investors are allowing the company to keep money coming into its coffers in the near term in order to fund and release more movies that might turn out to be profitable. Similarly, while Michael London's Groundswell has lost much of its money (I hear some $50 million) and TPG/Axon pulled its remaining equity (its corporate parent TPG also took a bath on MGM), Groundswell lender Comerica has fronted the company enough to keep it afloat--hoping for an eventual recovery.
Here's the official MGM statement:
MGM said today its lenders have agreed to extend the forbearance period until March 31, 2010. The lenders took this action in support of the Company’s efforts to strengthen its financial position and to facilitate the Company’s ongoing process of exploring strategic alternatives, which include continuing to operate as a standalone entity and evaluating a potential sale of the Company. MGM appreciates the continued support of its lender group. MGM also reiterated today that it has begun the second phase of the M&A process and is conducting due diligence with select parties who have submitted bids. This phase of the process is expected to run for the next several weeks.