MGM says creditors approve Spyglass merger

AP News
Posted: Oct 30, 2010 2:21 AM
MGM says creditors approve Spyglass merger

Creditors of struggling Hollywood studio Metro-Goldwyn-Mayer Inc. have voted to approve a merger with Spyglass Entertainment, MGM said Friday.

The approval came with the backing of billionaire investor Carl Icahn, a person familiar with the matter told The Associated Press. The person was not authorized to discuss the issue publicly and spoke on condition of anonymity.

Icahn, a significant holder of MGM's debt, voted for the Spyglass plan even though he had publicly supported a rival bid from Lions Gate Entertainment Corp., in exchange for representation on MGM's board, the person said.

More than half of the creditors, holding more than two-thirds of the $4 billion in debt outstanding, needed to support the plan.

The news of Icahn's support for the plan was earlier reported by the Los Angeles Times.

In a statement late Friday, MGM said the secured lenders voting in the process had "overwhelmingly approved its proposed plan of reorganization."

The plan had included a prepackaged Chapter 11 bankruptcy. MGM said it would move "expeditiously" to implement the plan.

Spyglass co-CEOs Gary Barber and Roger Birnbaum are now set to head the storied studio behind the James Bond franchise which also owns half the rights to the upcoming movies based on "The Hobbit."

Icahn, who also holds more than a third of Lions Gate's shares, had been buying up MGM debt in order to better control the outcome of the vote.

Lions Gate, upset at Icahn's strategizing, sued him Thursday for first opposing its deal, the backing it after he had bought up stakes in both sides of the deal in order to maximize his profits. Lions Gate said Icahn had obtained $500 million in debt at cut-rate prices without notifying other shareholders of his intentions.

Icahn did not respond to a request for comment.

Lions Gate had pressed its case strongly in the past week, detailing its proposal in a securities filing and touting its management's expertise even in its suit against Icahn.