MGM says not for sale but mulling options

LOS ANGELES (Reuters) - Hollywood studio Metro-Goldwyn-Mayer said on Monday it was not for sale but is exploring "enhancements" to its long-term capital structure that could include a stock offering or debt refinancing.

The move comes as Hollywood struggles to raise funding for movies as the credit crisis tightens.

MGM has retained Goldman Sachs to explore options for dealing with its $3.7 billion in debt, and an initial public offering of stock is one of several possible alternatives MGM could consider, said Jeff Pryor, a spokesman for the studio.

The company could also seek to refinance its debt or turn to the bond market, he added.

"We don't know right now because that's what Goldman is doing," Pryor said. "They haven't given us alternatives yet."

The company, responding to a New York Post report that it hired Goldman Sachs to look into a possible sale, also said the company was not for sale, that it had enough financing to meet its needs and that its private equity owners were pleased with the company's momentum.

MGM, in a statement, added that "there is no 'asking price' for the company."

Reports about MGM's possible sale intensified in the wake of the departure of producer Paula Wagner from MGM's United Artists studio earlier this month. Wagner, who is a movie producing partner with actor Tom Cruise, was chief executive of UA, but left to produce movies again.

United Artists, in which Cruise and Wagner both have stakes, last year secured $500 million in financing through Merrill Lynch to fund 15 to 18 movies over the next five years.

The Post, citing sources close to the situation, also reported that Merrill was examining its contract with UA as the bank looks to revise the deal on more favorable terms, in the wake of Wagner's departure.

A Merrill representative declined to comment on its relationship with UA.

The credit crunch sweeping the United States has slowed financing for Hollywood movies from investors who had poured billions into film projects in recent years, analysts said.

"Capital access is more restricted now in the film business than it's been in a decade," said Laura Martin, senior media analyst with Soleil Securities.

"Because the film business is hit driven, there is enormous risk when financing films, and the current credit squeeze has lessened investors' appetite for risk," she said.

Pryor said the credit crunch has complicated MGM's efforts to secure financing for its own slate of movies.

"We feel that we closed the Merrill Lynch deal for UA when the market was a very tough market, and we continue to have consultations with financial alternatives in the marketplace for financing an MGM slate," he said.

But MGM's inability to secure financing has not hurt the studio, because production has already slowed in anticipation of a possible strike by the Screen Actors Guild, Pryor said.

David Joyce, an analyst with Miller Tabak + Co, said other studios have also slowed production because of the credit crunch. But a feared SAG strike was even more pressing, he said.

MGM is owned by a consortium of companies, including private equity firms Texas Pacific Group and Providence Equity Partners, Sony Corp and Comcast Corp.

Reuters/Nielsen