Metro Goldwyn MayerMetro-Goldwyn-Mayer Studios has filed for a re-organization bankruptcy, the studio announced Wednesday. The move had been expected following the company's announcement late last week that its creditors had approved a pre-packaged bankruptcy for MGM and 160 of its affiliates. The reorganization plan includes a merger with Spyglass Entertainment.

The famous movie studio, which produced classics like The Wizard of Oz and still holds valuable assets including the James Bond franchise, had been struggling for years under a mountain of debt that reached as high as $4 billion. For most of the year, the company had been a takeover target for both Lionsgate Entertainment and investor Carl Icahn.

Under the Chapter 11 bankruptcy filing, MGM plans to exchange more than $4 billion in debt for equity in MGM once it emerges from bankruptcy, the studio said. It then expects to raise roughly $500 million in financing to cover the costs of its operations and the production of new movies and TV series. Throughout the process, MGM will retail ownership of all its assets.

The court is expected to approve the bankruptcy plan in the next 30 days and the studio says it has enough cash on hand to fund its operations through the bankruptcy process.

"For many months, we have been working with our lenders to explore the strategic options available to MGM to improve MGM's financial position and maximize the company's value," Steve Cooper, MGM's co-CEO, said in a statement. "By sharply reducing MGM's debt load and providing access to new capital, the proposed plan of reorganization achieves these goals. Having received approval through our recently completed solicitation process, we are pleased that the lenders support MGM's approach."

The studio's creditors, including Credit Suisse Group (CS) and JPMorgan Chase (JPM), will swap billions of dollars in secured debt for equity in the refashioned MGM. Icahn, who had recently been snapping up MGM debt as part of his takeover plans, will have the ability to appoint a director to the MGM board once it emerges from bankruptcy, notes a Reuters report.

For MGM, the Chapter 11 filing is aimed at removing the load of debt it has struggled under since its $2.85 billion leveraged buyout in 2005 by a group of private equity investors teamed with Comcast (CMCSA) and Sony (SNE), according to Reuters. In the years following the buyout, MGM and other studios have had to contend with DVD sales falling sharply as on-demand movies have become more popular and peer-to-peer technology has enabled people to pirate movies more easily.

MGM will be overseen by Spyglass executives Gary Barber and Roger Birnbaum after the bankruptcy.

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