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a commitment for an additional $190 million, 3-year revolving
credit facility ($190 million facility).17
In light of Credit Lyonnais’s escalating financial exposure
and MGM’s dwindling business prospects, Credit Lyonnais
formulated a business strategy for MGM which included:
(1) completely replacing the company’s management; (2)
restructuring MGM’s finances to replenish its equity capital and
to significantly reduce the weight of its debt; and (3)
establishing a 5-year business plan intended to reposition MGM
among the film industry’s “major players” and to increase the
value of its assets, particularly through an intensive program of
new film production.18
In July 1993, MGM began a comprehensive restructuring of its
capital structure and its corporate management (the 1993
restructuring). This restructuring consisted primarily of
splitting MGM into two entities. The goal was to set up a
separate operating company which would be capitalized with $1
billion in equity and would have sufficiently reduced liabilities
to allow additional borrowing from lenders other than Credit
Lyonnais. MGM was renamed MGM Group Holdings Corp. (MGM Group
17 The name of this agreement did not necessarily control
the amount that was advanced under the agreement.
18 Credit Lyonnais selected a 5-year business plan because
of U.S. laws requiring the bank to divest itself of MGM within 5
years of acquisition.
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