A deep sigh of relief over at MGM: bankruptcy is pushed back, yet again.
In a move that buys the company more time to find a buyer or radically restructure its debts, debt-holders for the debt-laden studio have extended their forbearance on interest and debt payments until the end of January.
The lenders had previously agreed to hold off on taking their cash until Dec. 15.
The company issued a statement on Friday saying:
"MGM said today its lenders have agreed to extend the forbearance until January 31, 2010. The lenders took this action in support of the Company’s ongoing efforts to develop and evaluate long-term strategic alternatives to maximize value for its stakeholders. MGM appreciates the continued support of its lender group for the process it is undertaking. MGM also said today it is beginning a process to explore various strategic alternatives including operating as a standalone entity, forming strategic partnerships and evaluating a potential sale of the Company."
In an emergency call with equity and debt holders in September, co-CEO Stephen Cooper said he needed an immediate $20 million for the studio to stay alive in the coming weeks, and would need to raise another $120 million or so shortly thereafter.
MGM has a crushing $3.7 billion debt, and has not found a successful moviemaking formula yet. The survival of the company remains very much in question, though it is presumed that the most likely outcome is a prepackaged bankruptcy that would lead to the sale of the historic MGM film library, and current production and development.
The most likely buyers in that scenario would be Time Warner or 20th Century Fox, which could immediately funnel MGM’s movies into their vast distribution system.
Cooper has been meeting on a near-continual basis with debt-holders, including Highland Capital Managment, Fidelity Investors and Stanfield Capital Partners, in an all-out attempt to get them to hold off on demanding repayment of their loans until the studio can come up with a viable restructuring plan.
Previously: Struggling MGM Wins Break From Bondholders