MGM reviewing offers from three interested bidders

Hollywood studio Metro-Golden-Meyer (MGM), home to the James Bond movie franchise, is to review a number of takeover bids it has received as it seeks additional delays on interest payments on its debts.

Times Online reports that Lions Gate Entertainment, Time Warner and Access Industries, backed by the Russian billionaire Len Blavatnik, were reported to have put in second-round bids for MGM yesterday, after the company extended an earlier deadline for bids of March 19.

Bids are understood to be in the region of $1.5 billion (£1 billion), far less than the $2 billion (£1.4 billion) or so level MGM's 140 creditors were hoping for.

Last night MGM said in a statement that it had received "a number of bids as part of its ongoing process of exploring strategic alternatives, which include continuing to operate as a standalone entity and evaluating a potential sale of the company."

It will now review the bids and related transaction terms over the next few weeks. As part of its efforts to strengthen its financial position and to facilitate its strategic review process, MGM also said expected to work with its lenders to extend the current forbearance period on its bank debt, which ends on March 31.

"The company also expects to seek a forbearance agreement for its revolving line of credit, for which a payment is due April 8. MGM appreciates the strong support it has received from its lenders throughout this process," the statement said.

One option said to be under consideration is a pre-packaged bankruptcy, with or without a sale, to reduce its liabilities and clean up its balance sheet.

The heavily indebted studio said in November it was exploring a potential sale of the company. But after it opened its books to an initial six bidders (whittled from a potential ten interested parties) last month, a number of bidders are understood to have dropped out.

Although MGM's film library, which holds 4,000 titles, is one of the company's most attractive assets, generating $450 million in 2008, the studio has been struggling to create new hits and is also trying to cope with plunging DVD sales caused by consumers moving online.

It is also burdened with $3.7 billion of debt from a $5 billion 2005 buyout by a consortium of private equity and media groups and also has a $250 million revolving credit facility maturing in April.

Shares in Time Warner Inc closed four cents higher at $31.28 in New York on Monday after reports that it was interested in bidding for MGM. Lions Gate shares closed down two cents at $5.82. Lions Gate's reported interest comes just after billionaire investor Carl Icahn offered to buy it in a move designed to forestall its bid for MGM.

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