MGM will keep THE HOBBIT

Last week we reported that MGM Studios was in danger of going bankrupt. What they needed to accomplish in order to keep from going under or having to sell off lucrative franchises like The Hobbit or James Bond, was to sway their lenders into entering into a forbearance agreement.

So some good news at last. After intensely hammering out the deal, MGM's lender group has agreed to just that.

MGM's lender group has agreed not to enforce its rights or remedies arising as a result of the Company's request to not currently pay interest due on September 30, October 31, and November 30, 2009.

Essentially, the money MGM would have payed in interest, will now be used to proceed with its participation in The Hobbit.

This agreement, which expires December 15, 2009, provides MGM with additional liquidity as discussions continue regarding the development of an optimal capital structure in support of the Company's long-term business plan. With the agreement in place, MGM has taken an important first step in ensuring that the Company has enhanced financial stability and adequate liquidity to implement its business strategies.

The first of The Hobbit films will hit theaters in 2011, withPeter Jackson producing and Guillermo del Toro directing that and a sequel. Jackson, Fran Walsh, Philippa Boyens and del Toro are currently writing scripts for both and are expected to deliver the first screenplay by the end of November.

If you'd like to read up on the technical mumbo jumbo, check out the full article.

We've said before that even if MGM did bite it, The Hobbit wouldn't be delayed. But this is definitely great news for the studio, who has a 50-50 rights partnership with WB's New Line unit, developing the two Hobbit films. MGM execs hope to ensure $40 million for its Hobbit activities, as the requested interest deferrals amount to more than $50 million.

If you'd like to read up on the technical mumbo jumbo, check out the full article.

Source: THR and ComingSoon