MGM Mulls Prepackaged Bankruptcy

NEW YORK (Reuters) – Metro-Goldwyn-Mayer, which has received several first-round bids in an auction to sell itself, is considering a prepackaged bankruptcy along with a sale, sources familiar with the matter said.

The studio, which has $3.7 billion in debt, could reduce liabilities and clean up its balance sheet in a prepackaged bankruptcy, leaving its buyer with a more attractive asset.

Sources said over the past several days that not all the 12 companies that have signed confidentiality agreements have put in bids.

Those that did put in first-round offers include Time Warner Inc (TWX.N) and Lions Gate Entertainment (LGF.N) as well as private equity firms, the sources said.

News Corp (NWSA.O), which had refused to sign the confidentiality agreement earlier due to a restrictive clause, has now signed the document but is yet to put in a bid, one of the sources said on Wednesday.

Time Warner and News Corp declined to comment. Lions Gate did not return a call seeking comment. (Reporting by Jui Chakravorty and Anupreeta Das; Additional reporting by Yinka Adegoke and Susan Zeidler)