MGM delays creditors' vote by a week, boosting Lions Gate merger proposal
MGM's board of directors has agreed to delay by a week the Oct. 22 deadline for a creditors' vote on a prepackaged bankruptcy plan that would see the management of Spyglass Entertainment run the restructured studio.
This pause gives MGM's roughly 100 creditors more time to consider an eleventh-hour merger proposal from Lions Gate Entertainment and its largest shareholder, Carl Icahn, who also holds about 12% of MGM's debt.
In a statement, a studio spokeswoman said that MGM has provided its lenders with additional financial information unrelated to the merger and that the extra week will give them more time to review it.
Earlier this week, MGM debt holder Franklin Templeton investments sent a letter to the board requesting the vote deadline be pushed back by three weeks to allow more time to consider Lions Gate's offer.
Supporters of a merger say that Lions Gate and MGM's businesses are complementary and will create more long-term value than leaving the latter studio independent. Backers of the Spyglass plan say that a merger makes less financial sense for MGM's debt owners, who would own 55% of the combined company, and would likely lengthen a reorganization process that has already gone on for more than a year.
Two of MGM's biggest debt owners, Anchorage Advisors and Highland Capital Partners, are said to support the Spyglass plan, according to people familiar with the matter. But it's unclear how MGM's other creditors will come down, with the notable exception of Icahn.
The delay is at least a momentary blow to Spyglass chiefs Gary Barber and Roger Birnbaum, who are poised to become co-CEOs of MGM once it emerges from bankruptcy. The longer a vote is put off, the more likely their plans could be derailed in favor of a merger with Lions Gate.
-- Ben Fritz and Claudia Eller