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Spyglass Pitches MGM a Bankruptcy Plan

Studio would re-emerge with scaled-down production slate that includes James Bond and ”The Hobbit“

Spyglass Entertainment may finally get its prize.

After pursuing Metro Goldwyn Mayer for months, Spyglass executives made a presentation on Wednesday to the studio’s debt holders that involves a pre-packaged bankruptcy, an individual with knowledge of the negotiations has confirmed to TheWrap.

MGM has been laboring under $4 billion in debt, while trying to attract a buyer for much of the year. Its precarious financial situation has put lucrative franchises such as “The Hobbit” and the James Bond franchise in limbo.

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, the company’s co-heads, Gary Barber and Roger Birnbaum, will get a 4 to 5 percent stake in the company following the restructuring, according to the Los Angeles Times.

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.

MGM declined to comment on the negotiations, and Spyglass did not return TheWrap’s calls.

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."