MUMBAI: In its bid to take control of MGM, Spyglass Entertainment suffered a significant setback after the ailing studio extended the deadline for creditors to vote on whether to hand the reins to Spyglass principals Gary Barber and Roger Birnbaum till 29 October.

The Spyglass plan would give the production company a 4.7 per ecnt stake in the studio and the balance of ownership to more than 100 lenders. The Spyglass plan would eliminate all MGM debt. Eventually, Barber and Birnbaum would seek new loans for MGM operating capital.

On the other hand, the delay gives rival suitor Lions Gate more time to convince creditors to consider its proposal. Backed by major shareholders including Carl Icahn and Gordon Crawford‘s Capital Research, Lions Gate proposes to merge with MGM to form a company in which it would hold a 45 per cent stake and the lenders 55 per cent.

MGM isn‘t letting lenders specifically vote on the Lions Gate plan, nor have Lions Gate executives been able to make a formal presentation. But with momentum on its side, the Lions Gate proposal could win by default if lenders vote against adopting the Spyglass plan.

One way or another, MGM needs to restructure its finances to reduce or eliminate almost $4 billion in debt. Any restructuring likely would culminate in the filing of a pre-packaged reorganisation plan in US Bankruptcy Court.