* CEO Sloan out as CEO, remains as non-exec chairman
* Team of three tasked to “office of CEO” role
* Restructuring expert Stephen Cooper brought in
* Cooper charged with improving balance sheet
* Production boss Mary Parent elevated (Adds comments by new CEO Mary Parent, paragraphs 4 and 5)
By Megan Davies and Sue Zeidler
NEW YORK/LOS ANGELES, Aug 18 (Reuters) - Metro-Goldwyn-Mayer Inc [MGMYR.UL] has replaced its chief executive, Harry Sloan, with a team that includes a turnaround expert and its production boss, Mary Parent, as the storied Hollywood studio grapples with reducing a massive debt load.
MGM has a renowned film library, home to James Bond movies and other gems, but has been struggling to create new hits amid a faltering economy and shrinking DVD market. Adding to its woes are looming payments on $3.7 billion of debt which stems from a 2005 buyout of the firm.
Many Hollywood insiders have long believed MGM needs to be merged or sold to be successful. But when asked if MGM was considering an outright sale, Parent told Reuters MGM was positioning itself for the long term as a production company.
“The plan is to keep doing what we are doing. I have a full slate of movies shooting, or are in pre- and post-production. The capital structure needs to be addressed, but with the films we have now and in the pipeline, I am very positive,” she said in an interview.
“Everybody’s very excited and on board with the new structure. This is a long-term plan for the company, we have a really solid team and I am going to continue making movies,” Parent said.
Sloan, a veteran Hollywood businessman who took the helm a few months after the 2005 buyout of MGM and who also invested in MGM, will remain with the studio as nonexecutive chairman, but will no longer be chairman of the board.
Restructuring expert Stephen Cooper and Parent, along with MGM Chief Financial Officer Bedi Singh, have been named “members of the office of the CEO.”
Cooper, also named vice chairman, will lead efforts to evaluate alternatives to improve MGM’s balance sheet, it said.
According to film financing experts, MGM’s operations have largely been funded recently by its library cash flow and access to $500 million of financing set up for its United Artists label, partly owned by movie star Tom Cruise.
It recently released “Valkyrie,” starring Cruise as a rebellious Nazi officer.
Cooper co-founded restructuring advisory firm Zolfo Cooper LLC, oversaw Enron Corp’s bankruptcy as interim CEO and oversaw Krispy Kreme Doughnuts Inc’s KKD.N restructuring as CEO.
Parent, a former executive with Universal Pictures, joined MGM in March 2008 to breathe new life into the studio and has been leading MGM’s production efforts as chairwoman of MGM’s Worldwide Motion Picture Group.
“This isn’t so much a referendum on Harry Sloan’s tenure as it is the plain recognition that shareholders and creditors are squaring off in an all-or-nothing battle,” said David Molner, managing director of Screen Capital International, a media and entertainment financing firm.
MGM in May hired investment bank Moelis & Co to help refinance its debt and said it was talking with a steering committee of 140 creditors as part of the process.
The studio, due to release a remake of the 1980 musical “Fame” in September, faces a payment of $250 million in April 2010 on its revolving credit, with the $3.7 billion of term debt due in June 2012.
But cash flow from MGM’s film and TV library operations finished 2008 down about 5 percent from a year ago, a source familiar with the matter previously told Reuters.
“I think this a sign that they’re going in the direction of not having a production slate,” said Steve Blume, chief operating officer of Content Partners LLC, which acquires films in the secondary market from hedge funds, private equity firms and banks.
“MGM has several options, including an outright sale of the company or making it into a pure library company, which is valued at somewhat less than the debt,” Blume said.
Rumors of MGM’s potential sale have surfaced for years, including last summer when Paula Wagner, a movie producing partner with Tom Cruise, stepped down from her role as chief executive of MGM’s United Artists.
MGM’s debt mostly stems from its 2005 buyout by a group including private equity firms Providence Equity Partners, TPG (TPL.N), DLJ Merchant Banking Partners, a unit of Credit Suisse CSGN.VX and Quadrangle Group; and media firms Sony Corp(6758.T) and Comcast Corp (CMCSA.O) in 2005 for $2.85 billion.
The group, which bought MGM from its majority owner Kirk Kerkorian, also assumed debt of about $2 billion.
Sloan trained as a lawyer but left a private law practice in 1983 and has been a media executive and investor since. He invested in and ran three media companies -- SBS Broadcasting, Lions Gate Entertainment Corp and New World Entertainment. (Reporting by Megan Davies and Sue Zeidler; Editing by Steve Orlofsky, Matthew Lewis and Richard Chang)