MGM Amends Terms of Credit Line

Metro-Goldwyn-Mayer Inc., owner of one of the world’s largest film libraries, said its $1.3-billion bank loan has been restructured to make it easier to buy companies and fund additional movies.

Banc of America Securities amended the loan’s terms by lifting restrictions related to investments and purchases as well as the financing of films with other companies. MGM said it asked the bank to make the changes.

The greater flexibility reflects MGM’s improvement under Alex Yemenidjian, who was named chairman and chief executive in April 1999. After more than a decade of losses, Yemenidjian steered MGM to profitability by slashing costs and working to increase distribution for MGM movies and TV shows through alliances.

“The [former] restrictions were a residue of so many years of difficulty at MGM,” said Harold Vogel, chief executive of New York-based Vogel Capital Management and a media analyst. “Now they are ready to move forward and loosen things up so they can do more things.”

MGM, based in Santa Monica, has long sought alliances to make better use of its library, which includes more than half of all films produced by Hollywood since 1948. The company, for instance, has had discussions with both Rainbow Holdings, the owner of American Movie Classics and Bravo, and with Starz/Encore Media Group about forming a cable joint venture.

On June 30, MGM had $279.2 million in cash and $600 million in unused credit, the company said.

MGM shares rose 38 cents to close at $25.75 in New York Stock Exchange trading. They’ve risen about 22% in the last year.