Metro-Goldwyn-Mayer's steering committee will meet with creditors to present a stand-alone plan for the famed studio next week, sources familiar with the matter said.
Creditors will present the plan in Los Angeles on Thursday after being disappointed with the bids it received, the sources said. The plan, which abandons the idea of a sale of the entire company, involves a mandate to make six to eight movies a year and requires large amounts of capital, the sources said.
It also involves filing for a pre-arranged bankruptcy, the sources added. Such a plan would need approval from a majority of the creditors.
MGM declined comment.
Lions Gate Entertainment, Time Warner Inc and billionaire industrialist Len Blavatnik's Access Industries put in second-round bids for MGM in the last week, with Time Warner putting in the highest bid of $1.5 billion in cash, Reuters had reported earlier.
Lions Gate had decided it would not increase its offer, putting them effectively out of the running, sources told Reuters on Thursday.
That leaves Time Warner and Access Industries, whose offer involves an equity infusion and helping with restructuring the company's $3.7 billion of debt, the sources said.
MGM's vice chairman and a member of its office of the CEO Stephen Cooper knows Access Industries' Len Blavatnik well. Cooper, who was enlisted by MGM to help with the company's restructuring last year, is also vice chairman of the supervisory board of LyondellBasell. Blavatnik is the chairman of that board.
Cooper is also the chairman of the restructuring committee at Lyondell, a chemical conglomerate formed in 2007, when it was bought by Basell AF, a unit of Blavatnik's Access Industries.
The Access offer would involve adding $2 billion of value to MGM, sources said, though it was unclear how that would be achieved. The offer would also help MGM with digital media and distribution, the sources said.
But Time Warner's bid remains on the table and MGM has not shared details of its stand-alone plan with any of the bidders, sources said.
MGM, home to more than 4,000 film titles, said in November it was exploring a potential sale of the company. But as the auction progressed, buyer interest in the company dwindled.
Despite a film library that includes the James Bond and Pink Panther franchises, MGM has been struggling to create new hits. It is also trying to cope with plunging DVD sales as consumers move to viewing online.
The financial crisis has not helped either.
A $2.85 billion buyout in 2005 by a group including four private equity firms -- Providence Equity Partners, TPG, Quadrangle Group and DLJ Merchant Banking Partners, and media companies Sony Corp and Comcast Corp, also saddled the company with debt.
(Reporting by Jui Chakravorty and Megan Davies; additional reporting by Emily Chasan, editing by Bernard Orr, Leslie Gevirtz)