MGM declares bankruptcy after Carl Icahn agrees plan

New York: Legendary Hollywood film studio MGM declared bankruptcy Wednesday, with reorganization plans approved by billionaire investor Carl Icahn under an agreement with Spyglass Entertainment. Metro-Goldwyn-Mayer filed for Chapter 11 bankruptcy protection in a New York court seeking approval of a "pre-packaged" plan approved by its creditors after rejecting a takeover offer from Lionsgate and its biggest shareholder, Icahn. The plan allows the company`s secured lenders to exchange more than four billion dollars in outstanding debt for most of the equity in MGM upon its emergence from bankruptcy protection, the company said in a statement. The main difference between the plan submitted Wednesday and another approved by its major creditors on Friday is linked to Spyglass, which recently released the Clint Eastwood-directed film "Invictus" and is preparing to release "The Tourist" with Johnny Depp and Angelina Jolie. An MGM spokeswoman told AFP that in exchange for Icahn`s support of the bankruptcy reorganization plan, Spyglass`s existing catalog would not part of the deal, but future films would be included. According to media reports, Icahn thought the previous plan overvalued the Spyglass catalog. The size of Spyglass`s stake in the reorganized MGM was not disclosed in the statement. Initially, Spyglass would have taken about five percent of the shares. In addition, Spyglass founding bosses Gary Barber and Roger Birnbaum would not head the board of the new MGM. Instead, they would serve as co-chief executives of MGM Holdings Inc. and as co-chairmen and co-CEOS of the primary operating subsidiary of MGM Holdings Inc. Icahn said in a separate statement that he will be able to name a board member. MGM said it hopes the modified plan will be confirmed by the court within about 30 days. "For many months, we have been working with our lenders to explore the strategic options available to MGM to improve MGM`s financial position and maximize the company`s value," co-CEO Steve Cooper said. "By sharply reducing MGM`s debt load and providing access to new capital, the proposed plan of reorganization achieves these goals... We now look forward to quickly emerging from Chapter 11." Famous for its trademark roaring lion logo, MGM has the Bond franchise as well as the "Pink Panther" and "Rocky" series. The studio, with a 4,000-strong back catalog that also includes "The Wizard of Oz" and "Singin` in the Rain," has been struggling in recent years, and its owners put it up for sale a year ago. Several candidates emerged, including US-Canadian studio Lionsgate, as well as America`s Liberty Media, Australian-born US media tycoon Rupert Murdoch`s News Corp and India`s Reliance Entertainment. Bureau Report