Billionaire investor Carl Icahn is offering to buy debt from the lenders of financially struggling Metro-Goldwyn-Mayer if they vote against MGM's proposed combination with Spyglass Entertainment.
Icahn opposes the Spyglass deal. Instead, he supports an offer from Lions Gate that would combine the boutique film studio with Metro-Goldwyn-Mayer Studios Inc.
Icahn, who owns stakes in both MGM and Lions Gate Entertainment Corp., said Thursday he is offering MGM's loanholders the right to "put" senior notes to Icahn entities. Icahn would pay 45 cents for every $1 of debt.
Puts give lenders the right, but not an obligation, to sell their loans to Icahn. Icahn's offer only kicks in if the holders of at least $963 million of the loans participate. If this amount is met, Icahn said he will accept the loans on a first come, first served basis. He may also accept more loans but is not obligated to do so.
Participating lenders will have to vote against the Spyglass plan and will be required to grant a proxy to Icahn.
Icahn's offer expires on Oct. 29, the deadline for MGM creditors to decide whether they want to accept a prepackaged bankruptcy plan that would give 5 percent of the company to Spyglass. MGM has more than $4 billion of debt.
Shares of Lions Gate slipped 6 cents to $7.43 in late morning trading Thursday.