MGM “Fire Sale” Won’t Make Anyone Happy
Tuesday, December 8, 2009 at 09:53PM 
Photos.comBy Derek Armstrong, Correspondent
With MGM facing a crippling debt of nearly $4 billion, demands from 150 debt holders have forced a possible “almost” fire sale. At least six real bids are expected before the next debt deadline of January 31. Although up to sixteen companies expressed interest in bidding, only two have so far agreed to sign confidentiality terms required to make a bid.
In the event bidding is less than $2 Billion, MGM will not emerge under new ownership, but may instead be allowed to propose a restructure-of-operations plan under new MGM chief Steve Cooper.
Mr. Cooper took the helm to struggle through the massive debts, but he surprised lenders with his attempt to recommend longer-term restructuring to allow business to continue. Lenders were not happy, leading to the current “fire sale”
The big contenders for MGM are likely to be Fox, Lionsgate and Warner Bros. As always, in these situations, bids may involve a total company sale or piece-by-piece assset sales. Lenders will likely favor an offer to acquire the entire company, provided the bid is higher than $2 billion.
The current owners of MGM—Comcast, Providence, Sony and TPG— are lkely to see only a small percentage of their investment returned. They acquired MGM for close to $5 Billion in 2004
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