Relativity's Hedge Fund Backer Buying Up MGM's Debt


Relativity Media’s hedge fund-backer Elliott Associates has been acquiring MGM’s debt, The Hollywood Reporter says, lending some credence to The Wrap’s report that Relativity may be trying to amass a large stake in the studio.

Elliott has acquired $300 million, or 7% of MGM’s nearly $4 billion in debt, at 58 cents on the dollar.

The New York-based hedge fund is Relativity’s main source of capital. Meanwhile, both Ryan Kavanaugh and Relativity, through its outside PR rep, had no comment on The Wrap’s report, suggesting that they may still be looking at the MGM.

The Hollywood Reporter outlines one possible goal of Elliott’s debt purchases:

Elliott has been helping Relativity morph from a financier of studio slates into an independent producer. So one possibility might be that Elliott would eventually agree to wipe clear its hundreds of millions in MGM debt in exchange for Kavanaugh’s gaining rights to a number of titles in the studio’s film library.

Indeed, acquiring control of any or all of MGM’s library would be the best strategy for Kavanaugh, as this is the most profitable part of the company, and that would answer the questions we posed earlier about what movies Kavanaugh would be releasing through MGM.

Additionally, while acquiring MGM seems like a bizarre move for Kavanaugh to make, one source notes that making a play for MGM would be a way for Kavanaugh to keep his dealmaking game of musical chairs going without giving anyone time to stop and realise his deals might not be doing so well.

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