According recent insider reports, the big name Hollywood studio Metro-Goldwyn-Mayer or MGM has sought out the services of investment bank Moelis & Co to help it refinance a debt amount of $3.7 billion. The debt is currently held by approximately 140 separate creditors.
This same source also explained that the creditors had formed a so-called steering committee to better oversee the progress of the debt. JPMorgan Chase & Co. was chosen to lead the group.
Representatives from MGM reported to the committee in order to outline its progress in keeping within certain parameters. Of those mentioned, the studio intended to show creditors that it kept operations in step with internal forecasts while also having a $500 million cash flow at the end of its March 31 fiscal year, which was brought in from film and television properties. This impressive number was actually about 5% lower than the previous year.
Members of financial institutions closely attached to the situation have estimated that the mega studio is paying more than $250 million annually in interest alone on the $3.7 billion debt. On another note, the loan is due in 2012, a fact that is ever present before the minds of studio executives.
More information listed by the informant-and noted in the report-indicated that MGM Studios was in total compliance with the terms of it loans and related debt covenants. Still, the studio is attempting to renegotiate the due date on the loans, or at the very least, reduce the cost of the loan.
MGM representatives stressed repeatedly that their intention was not to put the privately held company up for sale. In fact, sources confirmed that the management was adamant about their commitment to riding out the economic storms and carry on the business of making movies and making profits.
Tags: MGM Studios, company debt
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