MGM Studios to hold bank meeting in May for $1.5 billion credit facility

By Sara Rosenberg

New York, April 19 - MGM Studios is expecting to hold a bank meeting in mid-May for a new $1.5 billion credit facility. Bank of America, JPMorgan Chase and Fleet are co-lead arrangers for the deal according to a company spokesman. The loan is expected to close at the end of May or early June.

According to a syndicate source, the loan was launched on Thursday to agents. The loan consists of a $600 million term B, a $600 million revolver and a $300 million term A. Maturities have not been finalized, the company spokesman said. The term A and term B are expected to mature within six to eight years, while the revolver is expected to mature within six to seven years.

Interest rates are have not been finalized, and are therefore not being revealed, because the lead banks are waiting to see how the syndicate reacts to the offering, the syndicate source said. However, according to the company spokesman, rates should be comparable with the existing credit facility.

The stocks and assets of the Santa Monica, Calif. developer, producer and distributor of films and television shows, secure the loan. MGM Studios is a subsidiary of Metro-Goldwyn-Mayer Inc.

Proceeds will be used to refinance the company's previous $1.5 billion credit facility. On October 15, 1997, the Company entered into a $1.3 billion amended and restated credit facility, consisting of $600 million six-year revolver, a $400 million seven-and-a-half-year term A and a $300 million eight-and-a-half-year term B, a company filing with the Securities and Exchange Commission said. The loan was amended and restated again on July 21, 2000, with less restrictive operating and financial covenants. The amendment allowed for an additional $200 million tranche, bringing the total size of the credit facility to $1.5 billion. The revolver and the term A had an interest rate of Libor plus 250 basis points. The term B had an interest rate of Libor plus 275 basis points.

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