Business

MGM anticlimax

A sequel to the Metro-Goldwyn-Mayer vs. Carl Icahn thriller is in the making.

Legendary film studio MGM yesterday filed for bankruptcy in Manhattan federal court and agreed to consider a merger with Lionsgate once it emerges from bankruptcy, although the two sides have already been talking for months.

MGM also agreed to restrictions on poison pills and will give stockholders including Icahn, the billionaire activist investor, the ability to call special meetings.

Despite having the world’s biggest modern film library, MGM is considered too small a studio to survive long on its own. Insiders predict that within a few years it will be forced to merge with a studio like Lionsgate or perhaps be acquired by Time Warner, which owns Warner Bros. studio.

Just days ago, Icahn was trying to persuade fellow MGM debtholders to merge MGM into Lionsgate, in which he holds a large stake, and reject MGM’s plan to partner with production company Spyglass Entertainment. He claimed cost cutting would save the combined company about $100 million.

However, lenders rejected Icahn and voted overwhelmingly in favor of the Spyglass deal.

The activist investor subsequently persuaded the creditors that control MGM to not buy the Spyglass film library and to drop Spyglass’ equity stake in MGM when it emerges from bankruptcy from 5 percent to less than 1 percent. Icahn gets a board seat as well.

Now lenders holding $4 billion in debt, including Icahn, will exchange their claims for 99 percent of MGM and turn over management to Spyglass heads Gary Barber and Roger Birnbaum.

“I am pleased that we were able to obtain an agreement to make changes to the MGM prepackaged plan that allows me to support it and enables the company to avoid a potentially costly and disruptive bankruptcy process,” Icahn said in a statement.

Icahn and Lionsgate might have bid in bankruptcy court for MGM had it not reached a compromise. MGM hopes the bankruptcy lasts only 30 days.

MGM will put its distribution contract up for bid, with present distributor News Corp., the parent of the New York Post, and Time Warner possibly submitting proposals, a source said.

The studio plans to raise $500 million after it emerges from bankruptcy to start producing the Hobbit and James Bond films.

jkosman@nypost.com