Exclusive: MGM board expected to discuss IPO at March 18 meeting

Mon Mar 11, 2013 2:25pm EDT

The headquarters of the MGM movie studio is pictured in Los Angeles November 12, 2007. REUTERS/Fred Prouser

The headquarters of the MGM movie studio is pictured in Los Angeles November 12, 2007.

Credit: Reuters/Fred Prouser

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(Reuters) - The board of MGM, the storied Hollywood studio that exited bankruptcy in 2010, will discuss a long-awaited initial stock offering when it meets on March 18 amid indications that debt-holders who control the company may be nearing a decision to file.

MGM told investors it will release year-end numbers to investors on March 18 at 7:30 pm EST after the board meeting, and would hold a conference call the next day to explain the results and its current thinking on an IPO, according to three people with knowledge of the communication.

MGM is being advised by Goldman Sachs Group Inc and JPMorgan Chase & Co on a possible IPO, according to two people with knowledge of the matter.

The board may not decide on an IPO during its meeting, although investors say they have been told that a decision is likely this year, said one of the people.

A spokeswoman for MGM had no comment on either the board meeting or the scheduling of a potential IPO.

MGM is riding a hot streak at the box office that might set the stage for an IPO, taking public the 88-year-old studio synonymous with the golden age of Hollywood and responsible for such classics as "Gone with the Wind" and "The Wizard of OZ."

The studio jointly produced outsized hits "Skyfall," the James Bond movie, and the "Lord of the Rings" prequel "The Hobbit: An Unexpected Journey" that together generated worldwide ticket sales of $2.1 billion, according to the website Box Office Mojo.

"After two years of turning around the company and reinvigorating the studio, the time is right to do an IPO and broaden the shareholder base," said Steve Azarbad, co-founder and portfolio manager with Maglan Capital, which invests in distressed assets and owns 1 percent of MGM.

MGM generated $146.7 million in pre-tax earnings through its first nine quarters, ending September 30, it told its investors, a 63 percent increase over the same period a year earlier.

The company has library of about 4,100 older films and 10,800 TV episodes, it said in its 2010 bankruptcy filing.

Its pipeline of films to be released over the next two years includes two more "Hobbit" movies and a remake of its 1987 hit "Robocop" in February, the company said in its report to shareholders.

The Los Angeles-based company also controls the Bond franchise and has tentatively scheduled another installment in 2014 with "Skyfall" writer John Logan working on a script, according to the movie site IMDB.

MGM owns a stake in "G.I. Joe: Retaliation," starring Dwayne Johnson and Channing Tatum, that Paramount is scheduled to distribute on March 29, the studio also said.

"In this market environment, content is king," said Azarbad, "and (CEO) Gary Barber has done an unbelievable job in turning around the studio and leveraging the library to deliver substantial cash flows for years to come"

In August, the company bought 17.6 million of its shares from investor Carl Icahn for $33.50 per share, according to its report to shareholders. The $590.4 million acquisition valued the company at around $2.4 billion.

Employees and others hold options to nearly 9.7 million with an average exercise price of $36.85.

(Reporting By Ronald Grover; Editing by Edwin Chan and David Gregorio)

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