The Plan provides for MGM’s secured lenders to exchange more than $4 billion in outstanding debt for approximately 95.3 percent of equity in MGM upon its emergence from Chapter 11. Spyglass Entertainment would contribute certain assets to the reorganized company in exchange for approximatel y 0.52 percent of the reorganized company. In addition, two entities owned by Spyglass affiliates – Cypress Entertainment Group, Inc. and Garoge, Inc. – will merge with and into a subsidiary of MGM, with the MGM subsidiary as the surviving entity. The stockholders of Cypress and Garoge will receive approximately 4.17 percent of the reorganized
company in exchange.
Following the receipt of the requisite consents from secured lenders during the solicitation period, and in order to implement the debt restructuring, MGM intends to commence pre-packaged Chapter 11 cases under the U.S. Bankruptcy Code and seek confirmation of the Plan. Gary Barber and Roger Birnbaum, currently Co-Chairman and Chief Executive Officer of Spyglass Entertainment, would serve as the Co-Chairman and Chief Executive Officer of MGM following the company’s emergence from Chapter 11. The deadline for the Company’s secured lenders to vote on the Plan is October 22, 2010, unless extended. Only holders of secured debt as of October 4, 2010 under MGM's April 8, 2005 Credit Agreement will be solicited.
While the next iteration of James Bond is on hold, negotiations to bring Peter Jackson's 3-D The Lord of the Rings prequel The Hobbit into existence in New Zealand (where union issues are not yet resolved) are continuing. Warner Bros./New Line and MGM are still hammering out an agreement--described by one participant as "the most complex 3 dimensional chess match I've ever been part of, or am ever likely to be"-- to finance the film for a January start.