Spyglass founders Gary Barber and Roger Birnbaum have moved closer to taking over Metro-Goldwyn-Mayer, signing a non-binding letter of intent Wednesday to assume control of the venerable studio as co-chairmen and co-CEOs, an official close to MGM confirmed.
The L.A. Times reported that Barber and Birnbaum are courting veteran Hollywood financier Ken Schapiro to join on as COO, if and when they assume control of the nearly bankrupt MGM.
Schapiro is partnered with Amir Malin in the private capital fund Qualia Capital, which last spring proposed restructuring MGM's debt with a cash infusion of $500 million.
Should Schapiro join in, Qualia could help recapitalize MGM after creditors convert nearly $4 billion in debt to equity as part of a pre-packaged bankruptcy.
That cash infusion would allow Barber and Birnbaum to move forward with pre-existing deals for Peter Jackson's "The Hobbit" and the James Bond franchise.
Spyglass declined comment for this story.
If the deal goes through, it would be an ignominious end for the legendary movie studio, as it essentially amounts to MGM going into receivership. Under Spyglass' proposal, Barber and Birnbaum will get a 4 to 5 percent stake in the company following the restructuring.
Spyglass would continue to operate independently, while MGM will produce a handful of movies each year, among them Bond and “The Hobbit.” In addition, MGM boasts a library that numbers over 4,100 titles.
Should Spyglass take over the company, the current executive team, headed by Mary Parent, would likely exit.
In July, MGM asked for and received its sixth extension on a massive debt repayment. It is currently has until Sept. 15, 2010 to deliver a $250 million principal payment and over $200 million in interest to more than 100 lenders. Many of those lenders were on the conference call with Spyglass on Wednesday.
The debt-strapped studio has received only passing interest since it first went on the market Lionsgate and Len Blavatnik's Access Industries were believed to have been contenders, but the highest known bid is a $1.5 billion offer from Time-Warner.
Spyglass recently co-produced "Dinner for Schmucks," "Get Him to the Greek," and "Star Trek."