Film financing sources leaked last week that MGM Studios bonds were running wild, pricing very high in trading. According to Deadline.com, this sudden volatility is due to purchases made by Carl Icahn’s hedge fund, Icahn Associates. It is estimated that Mr. Icahn’s firm has purchased somewhere in the hundreds of millions of dollars worth of the bonds.
Insiders are guessing that Carl Icahn wants to take over MGM Studios and bring it back without going through bankruptcy proceedings. Because the bonds aren’t heavily traded though, buying this much of the bonds at one time risks driving the prices up. With $3.7 billion dollars worth of MGM bonds out there, it will be difficult to buy enough bonds to take complete control over MGM’s future.
There’s also speculation surrounding the motivation behind Carl Icahn’s takeover attempts. Film financers think he wants to buy MGM for his 29-year-old son, Brett. His son has worked as an analyst and trader for his father’s hedge fund Icahn Associates. Brett has expressed an interest in the entertainment business, raising money for several venture projects in the industry.
Following Carl Icahn’s failed bid for a seat on the Lionsgate board, which he wanted to give to his son, he could be trying do the same with an MGM seat. Icahn’s bid was denied due to fears that his shareholder activism is a mask for more aggressive intentions. |
