Storied Hollywood studio Metro-Goldwyn-Mayer may opt for a stand-alone plan if bids disappoint, and creditors are expected to meet early next week as the company sifts through expected offers, sources said.
The studio, struggling with $3.7 billion of debt, said in November it was exploring a potential sale of the company. It said at the time its other options included operating as a stand-alone entity or forming strategic partnerships.
Second-round bids are due on Friday but it was not immediately clear how many firms submitted offers.
At least three parties, including Time Warner and billionaire Len Blavatnik's industrial holding company Access Industries, have been expected to put in bids, sources familiar with the process said.
Lions Gate Entertainment has also been expected to bid, sources said, but doubt was cast on that by investor Carl Icahn's offer on Friday to buy Lions Gate, a move designed to forestall its expected bid for MGM.
However, the value of these offers is likely to be below $1.5 billion -- far less than the level MGM was initially expecting, the sources said.
A committee of MGM's creditors is expected to meet on Tuesday and is likely to assess the company's situation, one source said.
MGM had earlier this year considered a prepackaged bankruptcy along with a sale.
However, in recent days it has increasingly factored in the possibility that bids will come in far lower than it originally expected and that a stand-alone plan might be more favorable to creditors than a sale, those sources said.
A stand-alone reorganization plan would most likely involve it seeking bankruptcy protection to rework its debt, with creditors taking control. Still, two sources familiar with the process were skeptical about the stand-alone plan, pointing to the potential difficulty of execution.
Several initial bids, submitted January, came in under $2 billion, sources said at the time.
MGM has a renowned film library, home to James Bond movies and other gems, but has been struggling to create new hits as sales of DVDs shrink and people access entertainment online.
MGM's debt mostly stems from its 2005 buyout for $2.85 billion by a group including four private equity firms -- Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, a unit of Credit Suisse -- and media companies Sony Corp and Comcast Corp.
MGM declined comment on the process on Friday.
(Additional reporting by Jui Chakravorty and Alex Dobuzinskis in Los Angeles; Editing by Gary Hill)