• Los Angeles Times, Wednesday, October 13, 2010 10:34 AM

In a surprise move, Lions Gate Entertainment has made another merger proposal to MGM lenders, potentially upsetting a proposed prepackaged bankruptcy plan that would hand debt-holders about 95% of the studio. The development comes one day before Lions Gate is scheduled to square off in a Canadian court with dissident shareholder Carl Icahn.

Lions Gate's proposal, which would give MGM lenders a 55% stake in the merged company, would combine Hollywood's leading independent movie and television studio with one of industry's oldest, but most financially crippled studios with an extensive film library. MGM's current bankruptcy plan calls for Spyglass Entertainment principals Gary Barber and Roger Birnbaum to take over the management of the studio along with a minority ownership stake of just under 5%.

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