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MGM's $650 Million Financing Positions It for IPO
By Alex Ben Block ,  The Hollywood Reporter

The Hollywood Reporter -- Metro-Goldwyn-Mayer is in the final stages of a new $650 million bank financing that will retire its current debt, pay back money it borrowed from Sony and Warner Bros. to make Skyfall and The Hobbit: An Unexpected Journey and position the Lion to roar to Wall Street that it is ready to move forward with an initial public stock offering, probably by June.

MGM s official rep had no comment, but The Hollywood Reporter has confirmed with several sources in the financial community that MGM -- led by financially savvy CEO Gary Barber -- has lined up a group of banks that will lend up to $650 million as needed. That will replace the current credit facility, which was negotiated last year, even before those funds are fully used.

The money, at a lower interest rate, is for general corporate purposes. So in addition to using it to pay for operations, movie and TV productions, MGM can use it to pay back money it borrowed to make Peter Jackson's newest entry set in Middle-earth and James Bond's latest trip to the big screen. At the time they were produced, MGM was still emerging from bankruptcy and needed help to get the movies made.

RELATED: apcm:Sources Say MGM Delays Potential $3 Billion IPO For 'Skyfall,' 'Hobbit' Releases

The Hobbit, a partnership with Warner/New Line and Danjaq (the producers), already has topped $800 million worldwide, and Skyfall, being released by Sony Pictures, has grossed in excess of $1 billion. Both pictures are still in theaters and, with some awards attention, should play on the big screen for some time.

Both have great promise in the electronic and home video markets, as well as the digital aftermarkets. The fact the movies are part of ongoing franchises provides banks with a level of assurance and will be part of the sales pitch when MGM returns to the public markets.

JPMorgan, a longtime MGM partner on financings, is leading the syndication of the company's new credit facility. Banks already on board include Bank of America, Union Bank, Wells Fargo, Sun Trust, Royal Bank of Canada, One West Bank, City National Bank and Citi Bank.

RELATED: MGM Suffers 3Q Operating Loss but 'Hobbit,' 'Skyfall' Raise Hopes

The new money also will be available for acquisitions, with some bank restrictions, if MGM finds anything it wants to buy. apcm:Sources say the studio has been looking at new media as a place where they may invest.

And in fact, MGM also stands to get another injection of revenue from digital deals. Unlike most other studios, it has not yet licensed its huge (but aged) 4,000-plus-title library of movies and thousands of TV shows for digital streaming by services such as Netflix and Amazon. There have been some deals in selected territories around the world but none in the U.S.

All of that augurs well for MGM s public stock offering, which has been in the works since the middle of last year. It was pushed to 2013 so the studio s balance sheet would better reflect the expected huge successes of The Hobbit (with two sequels to follow) and Skyfall. Since MGM is no longer a theatrical distributor, it must wait for its share of the revenue from those movies to flow to its coffers and be recognized as revenue, which was a reason to hold off on the IPO until those numbers exploded on the corporate balance sheet.

Related article on THR.com:

Paramount Producing Brett Ratner's 'Hercules' With MGM

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