DeadlineHollywood is reporting that MGM held a very long conference call with bondholders and lenders that caused lots of people to become "very loud and very upset." It turns out that the studio is on the verge of bankruptcy.
The call was to make a desperate plea for money in the amount of $20 million in short term and another $150 million to get through the rest of the year. One major project that MGM needs to fund is Guillermo del Toro and Peter Jackson's The Hobbit prequel.
In addition, MGM is $3.5 billion in debt and has requested that the bondholders waive the company's interest payments until February 2010. The bondholders know that they probably won't get all their money back if MGM goes bankrupt, since it's only worth about $1.5 billion. Unfortunately, that's exactly the direction they want to go in.
What this means is that if MGM goes bankrupt, it will lose the rights to James Bond (to pay part of the debt) and The Hobbit could be delayed indefinitely. The next step is for the bondholders to have a vote to decide MGM's fate. Stay tuned.
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