RPT-UPDATE 2-Icahn buys more MGM loans to thwart Spyglass deal

* Icahn seeking to buy $500 mln in MGM senior loans

* Icahn buying MGM loans outside of tender offer

* Icahn favors plan to merge MGM with Lions Gate

By Sue Zeidler

LOS ANGELES, Oct 27 (BestGrowthStock) – Billionaire Carl Icahn on
Wednesday persisted in his crusade to block a pending deal
between Metro-Goldwyn-Mayer Inc and Spyglass Entertainment
saying he had raised his stake in the studio by purchasing a
“substantial” amount of debt.

Icahn, who backs a rival proposal to merge MGM with Lions
Gate Entertainment Corp (LGF.N: ) said on Wednesday that he had
bought senior secured loans for 50 cents per one dollar in
principal amount.

These purchases are in addition to his recently announced
tender and put offers for the loans. Prior to these efforts,
Icahn was reported to have a debt position in MGM worth an
estimated $500 million.

MGM declined to comment on Icahn’s latest action or his

Unlike the previous offers, the purchases disclosed on
Wednesday were not conditional on any minimum amount purchases,
but did require sellers to be holders of record and to vote
against the Spyglass plan. The voting deadline is this Friday.

On Tuesday Icahn offered to buy $1.6 billion in MGM
secured loans at 53 cents per dollar principal amount and last
week offered to buy up to $963 million in MGM senior debt from
creditors on the condition that they vote down the Spyglass

MGM, which has struggled with heavy debt after a leveraged
buyout in 2005, on Monday sent a memo to creditors dismissing
Lions Gate’s claims of synergies and cost savings outlined in
its merger proposal, a source familiar with the matter told
Reuters. [ID:nN25276348].

The studio favors a plan that calls for Spyglass chiefs
Gary Barber and Roger Birnbaum to take over a slimmed down MGM
after a prepackaged bankruptcy, the source said on condition of
anonymity because the memo had not been made public. A
prepackaged bankruptcy is a faster method of reorganizing than
a typical bankruptcy filing.

Sources have said a group of hedge funds including
Anchorage Advisors and Highland Capital, which control $800
million of MGM debt, are supporting the Spyglass deal.

These funds think the Lions Gate deal lacks clarity, would
take longer than the Spyglass deal and could derail a
long-sought production deal with Time Warner Inc (TWX.N: ) to
produce two films based on “The Hobbit,” the sources said.

Highland declined comment, and Anchorage was not
immediately available to comment.

Icahn, who owns more than 30 percent of Lions Gate, also
has a tender offer out to buy that studio’s outstanding shares
for $7.50 a piece.
(Reporting by Susan Zeidler)

RPT-UPDATE 2-Icahn buys more MGM loans to thwart Spyglass deal