Indian billionaire Anil Ambani-led Reliance ADA Group has restarted talks over a potential buyout or equity investment in Metro-Goldwyn-Mayer.
NEW YORK: Indian billionaire Anil Ambani-led Reliance ADA Group has restarted talks over a potential buyout or equity investment in Metro-Goldwyn-Mayer, a media report said on Tuesday.
Quoting several sources involved in or close to the situation, the New York Post reported that discussions were "exploratory", with Reliance's bankers at UBS trying to come up with a deal structure "that makes the numbers work."
"These sources also said that News Corp, former Yahoo! and Warner Bros CEO Terry Semel and 'three or four others' have also expressed interest in MGM to Goldman Sachs, which studio boss Harry Sloan retained in late August to look at 'strategic alternatives' for the company," the report said.
According to the publication, Reliance, through its Reliance Big Entertainment unit, had previously kicked the tires on MGM, but the talks were put on hold while it finalised its deal with the Steven Spielberg-led DreamWorks.
"And despite closing all but the USD 700 million debt component of the USD1.2 billion DreamWorks transaction, Reliance is understood to still be keenly interested in MGM," the report noted.
Pointing out that Reliance faces obstacles if it buys all of MGM or simply makes an equity investment, the report said, an outright purchase of MGM would trigger change-of- control provisions in the studio's credit lines that the lending banks could use to pull the funding.
MGM studio has revolving credit facilities totalling USD 450 million from JP Morgan Chase and USD 500 million from Merrill Lynch.
"Reliance would want to bring that credit with them to help with leverage and in determining how much money to put in," the publication said quoting a source close to MGM.
According to sources, the report said MGM's owners would not sell out or bring in additional equity at anything less than the USD 5 billion total they paid for the studio in 2004.
MGM's equity partners include Sony, Comcast, Providence Equity Partners and Texas Pacific Group.
"MGM needs money and Reliance has ample cash, but sources said its bankers have not yet found a model to justify a USD 5 billion valuation for the studio," New York Post said.
Quoting another source close to the situation, the report said, "I would be surprised if anything happened before next fall... Instead, I think Harry [Sloan] will continue repositioning the company as a movie producer, with an eye towards a liquidity event when it can negotiate from a position of strength."
Besides, The Daily Mirror on Tuesday said Indian billionaire Anil Ambani is in talks with Everton Chairman Bill Kenwright to buy the premier league club.
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