MGM senior lenders offered chance to put loans to Icahn affiliates

By Caroline Salls

Pittsburgh, Oct. 21 - Carl Icahn's affiliated entities have offered Metro-Goldwyn-Mayer Inc.'s senior secured lenders the opportunity to put their senior loans to the Icahn entities at a purchase price of $0.45 per $1.00 in principal amount of loans, according to an Icahn news release.

Icahn said the offer, which is conditioned on participation from at least $963 million principal amount of the loans, will give the lenders the right to keep any upside on their MGM position without taking risk on the downside.

If the participation threshold is met and other conditions are satisfied, Icahn will be obligated to accept that amount on a first-come, first-served basis.

The Icahn entities reserve the right to accept more senior loans in the offer but are not obligated to do so.

The offer will expire at the voting deadline for the MGM/Spyglass pre-packaged plan on Oct. 29, unless extended at the sole discretion Icahn's affiliates.

The put will be usable and exercisable by participating lenders from Oct. 29 until two weeks after the date MGM exits bankruptcy or for one year, whichever comes first.

Participating lenders will be required to vote against the previously announced Spyglass plan and will be required to grant a proxy to Icahn. Those voting rights will continue through the exercise period of the put right.

In order to be eligible for the offer, holders must own senior loans issued under the April 2005 MGM credit facility as of the Oct. 4 record date for the Spyglass plan and must have voted against that plan.

The put offer is subject to rejection of the Spyglass plan.

According to the release, Icahn "is firmly opposed to MGM's current proposed Spyglass plan and the related transaction with Spyglass."

Icahn called the Spyglass plan a "prescription for disaster," and he urged all of MGM's senior lenders to vote against the Spyglass plan even if they do not accept the put offer.

"The plan is being backed by certain members of the MGM creditors committee and is being ramrodded through with the typical fear tactic that the sky will fall if the plan is not approved," Icahn said.

He said "it is more likely for the sky to fall if the Spyglass plan was approved."

In addition, Icahn said MGM's lenders "are being rushed into an extraordinary pre-packaged plan with limited information and input on a hurry up basis that frustrates any dissent."

Icahn said in the release that Lionsgate has made an offer for MGM, but their request to put it out publicly has been refused, and at least one other offer has been made, which has not been made public by MGM or the MGM creditors committee.

"It is my intention to bring all of these offers to light," Icahn said. "We should not allow ourselves to be railroaded into the Spyglass plan."

MGM is a Los Angeles-based motion picture, television, home video and theatrical production and distribution company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.