Metro-Goldwyn-Mayer Inc. has filed a prepackaged Chapter 11 bankruptcy-court protection after finally winning the approval of billionaire investor Carl Icahn by making certain concessions and changes in the Chapter 11 bankruptcy plan.
Mr. Icahn had offered to buy out other MGM creditors at a premium to upend the vote on the Spyglass restructuring plan but failed to get enough support to block the deal.
Mr. Icahn has been pushing MGM's creditors-led by J.P. Morgan Chase & Co. and hedge funds Anchorage Advisors and Highland Capital Management-to merge with Lions Gate Entertainment Corp., a rival studio that the activist investor has been trying to take over all year as its largest shareholder.
To get its reorganization plan approved by a bankruptcy judge, MGM needed creditors holding roughly two-thirds of the studio's $4 billion debt load and more than half of individual debt holders to vote for the deal. In the end, Mr. Icahn remained among the only holdouts, the people said.
Concessions for Icahn include giving him a seat on the board after MGM exits bankruptcy and excluding older Spyglass films from merging with the MGM film library during the bankruptcy restructuring. Also, MGM's largest creditors have agreed informally to continue negotiations regarding a possible merger with Lions Gate, but they did not include language in the prepackaged Chapter 11 bankruptcy that would require such negotiations to take place. However, Icahn has made it clear that he wants a Lions Gate merger and was very aggressive about making that happened during the MGM bankruptcy. Because if this, it is possible that such a merger could still take place after the company exits bankruptcy.