One year after MGM (Metro-Goldwyn Mayer) came out of bankruptcy the company has managed to secure $500 million in new loans from lenders who will help the company retire debt it took on when emerging from court while providing the revolving credit facility the company requires to expand TV and Film offerings.
The new line of credit was announced on Monday by co-CEO’s Gary Barber and Roger Birnbaum who said in a joint statement:
“A year ago MGM was in bankruptcy and to receive this oversubscribed facility just one year later is proof positive that through careful and efficient business decisions, we have earned the faith of the financial community.”
Money from investors will include films that have been formed under the company’s partnership with Sony Pictures Entertainment including 21 Jump Street, The Hobbit: An Unexpected Journey and The Hobbit: There and Back Again.
The studio is also in the process of remaking Robocop, Carrie, Teen Wolf and Poltergeist.
Restructuring for MGM began in May 2009 when the company hired investment bank Moelis & Co. and then replaced CEO Harry Sloan with Stephen Cooper in August 2009. Cooper is a well known turnaround expert.
By entering into bankruptcy MGM was able to stave off annual interest payments of $300 million annually with Moelis receiving $9 million for its efforts.
The company’s new loan is led by JPMorgan Chase which offered upwards of $75 million for the new credit facility. The rest of the money came from various investors including Deutsche Bank, Bank of America Merrill Lynch, Royal Bank of Canada, SunTrust Bank, Wells Fargo and others.
Speaking about the loan Vice Chariman of JPMorgan Chase John Miller revealed:
“The success of this financing further validates investor confidence in the management team and their ability to execute on its business strategy. Market demand was significantly greater than the $500MM issuance, which is a clear indication that the bank market continues to strengthen for the entertainment sector.”
I am personally uninspired by the fact that much of that revolving credit will go into remaking movies, it’s the lack of imagination that has led to less than stellar returns for many of MGM’s movies over the last several decades, now they are turning new cash into rehashed ideas.
Do you think MGM’s slate of soon to be released movies will help turn the company’s fortunes around?