RELATIVITY PURSUES STAKE IN MGM TO FORCE BANKRUPTCY RESTRUCTURING (TW)

By R. Kinsey Lowe

Ryan Kavanaugh's Relativity Media is maneuvering to seize MGM and force a bankruptcy restructuring, according to the Wrap.

Through a spokeswoman, MGM denied such a scenario, but sources told the Wrap that negotiations were taking place with investor owners of MGM, not studio management.

Such a deal would Relativity buying stock held by Highland Capital, the Carlyle Group or Sequoia Group, and using that mechanism to force MGM into bankruptcy. Sony and Comcast are also owners of MGM.

Relativity could then streamline the company�s overhead and use MGM's distribution apparatus for Relativity�s own films and operate without the current burden of creditors, the Wrap said.

Relativity's interest emerges as MGM and its owners have each hired their own financial consultants to find a way to ease the company's $3.7 billion debt burden and the $250 million in yearly interest that entails.

With reliable access to financing, Kavanaugh has become a production and financing force in Hollywood, amassing lots of movies as well as the genre label Rogue Pictures and library aquired from Universal last year.

Because of the "Rubik's Cube" complexity of MGM's finances, a source involved with Relativity's strategy contends that anyone attempting to buy MGM out of its troubles will fail, the Wrap noted.

"MGM is not buyable," the individual told the Wrap. With roughly 150 debtors at approximately 90 different institutions, the source told the Wrap, �The only way is to restructure it through bankruptcy.�