Some lenders were said to be miffed when, after Metro-Goldwyn-Mayer's new $2.4 billion loan broke into the secondary loan market on Wednesday, reports emerged that Sony Corp. was negotiating a deal to acquire the company for $5 billion. Lenders were questioning the strategy of the company. One dealer asked why MGM paid the fees to get a new bank deal completed if it was in talks to be acquired?
If the acquisition were completed, the new loan could be taken out at par. Although only a handful of lenders were likely to have bought MGM's "B" loan when it traded as high as 1011/4-1013Ž4, several lenders were looking forward to MGM being a flow name in the market, noted one buysider. The loan included a $1.6 billion "B" loan and $800 million pro rata. The "B" loan was quoted a point weaker the day following the news in the 1001/4-1005/8 range
MGM's new $2.4 billion loan was led by Bank of America and J.P. Morgan, and was put in place to pay a one-time dividend to shareholders. Kirk Kerkorian owns almost three-quarters of the company. Calls to Charles Cohen, MGM's executive v.p. of finance and corporate development, were referred to a spokesman who did not return calls. A B of A spokeswoman declined to comment. A J.P. Morgan spokesman could not provide comment by press time.
Altogether, lenders noted that they were not too upset about the news. "We're all big boys," they said. But, on the plus side, Sony's potential acquisition of MGM is "unlikely to happen any time soon," a buysider speculated.