Metro-Goldwyn-Mayer Inc., the Hollywood movie studio struggling to recover from a bankruptcy that ended just over a year ago, said Monday that it has a deal to borrow up to $500 million in a revolving credit facility that will allow it to retire a term loan and continue funding new production.
The refinancing comes ahead of the release of the much-buzzed-about "21 Jump Street" from Sony Corp.'s Columbia Pictures, which MGM helped produce. The studio is making its biggest bet on the two-part "Hobbit," series, a prequel to the hugely successful "Lord of the Rings" trilogy. The first installment, "The Hobbit: An Unexpected Journey," is set for release in December.
MGM did not detail the terms of the new facility.
A revolving facility means MGM will only have to pay interest on the portion of funds that it borrows, which should significantly cut its interest payments.
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The company had been paying interest on a $500 million term loan that it took out when it exited the bankruptcy process in December 2010.
Gary Barber and Roger Birnbaum, the co-chief executives of the studio, said the refinancing one year after their previous loan shows that the company has earned the faith of the financial community.
JPMorgan Chase, which led the offering with Deutsche Bank, said demand for the offering exceeded supply, which is good news for entertainment companies that need access to capital.