August 10, 2010 / 10:44 PM / 10 years ago

Spyglass nears deal to run film studio MGM-WSJ

* Spyglass chiefs Barber, Birnbaum to run MGM-WSJ

* MGM to seek prepackaged bankruptcy in mid-September-WSJ

NEW YORK, Aug 10 (Reuters) - Spyglass Entertainment is nearing an agreement to run Metro-Goldwyn-Mayer Inc once the film studio restructures $4 billion of debt this summer through the bankruptcy process, the Wall Street Journal said on Tuesday, citing people familiar with the matter.

An agreement could come as soon as this week, valuing MGM at about $1.9 billion, the newspaper said, citing the sources. The sources also said MGM hopes to file a prepackaged bankruptcy in mid-September when its latest debt waiver expires, according to the Journal.

MGM creditors have spent the better part of a week with Spyglass co-heads Gary Barber and Roger Birnbaum negotiating the makeup of a board, and have worked out financial details, the newspaper said.

Barber and Birnbaum would run MGM as co-chief executives, and Spyglass would receive a 4 percent stake in a reorganized MGM, the newspaper said.

Creditors would forgive all MGM debt in return for the bulk of the restructured studio’s equity, the newspaper said, citing the sources. MGM hopes to limit its Chapter 11 reorganization process to about two months, the newspaper said.

MGM creditors have left open the possibility of pairing with other studio rivals, including Lions Gate Entertainment Corp LGF.N and Summit Entertainment, which have made recent overtures, the newspaper said, citing the sources.

The creditors would have to relinquish one-fourth to one-half of the new studio’s equity in transactions with Lions Gate or Summit, the newspaper said.

Representatives of Lions Gate, MGM and Spyglass did not immediately return calls seeking comment. Summit could not immediately be reached for comment. (Reporting by Jonathan Stempel; Editing by Steve Orlofsky)

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