The Metro-Goldwyn-Mayer movie studio has been putting together a reorganization plan for Chapter 11 bankruptcy, part of which is that Spyglass Entertainment would take over management of the studio.

Now Lions Gate has offered a merger agreement with debt-laden MGM, potentially cancelling out the plan for management by Spyglass Entertainment.

San Diego mergers and acquisitions attorneys note that the Lions Gate’s deal is backed by Carl Icahn, who is a major shareholder in both companies. Icahn opposed MGM’s bankruptcy reorganization plan under which control of the company would have passed to its creditors who would have appointed Spyglass to run the studio.

Bids for a 2-billion-dollar buyout bid from Indian conglomerate Sahara India and a 1.5-billion-dollar offer from Time Warner were rejected by MGM’s creditors.

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MGM owns the James Bond, Pink Panther and Rocky franchises. However decades of mismanagement have left it staggering under a 4-billion-dollar debt burden. The studio next plans to make two films based on The Hobbit, the prequel to The Lord of the Rings, in partnership with Warner Bros, though questions about its financial future have forced repeated production delays.

Lions Gate said that the combined company would be owned jointly by MGM’s creditors and Lions Gate. The deal would reportedly give the creditors a 55- per-cent stake in the new entity.

Lions Gate recently made the hit action movie The Expendables and also has a successful TV department, which has made series such as Mad Men, Weeds and Nurse Jackie.

Source: Monsters and Critics “Lions Gate offers merger deal to MGM” 10/12/2010