Lenders for Hollywood studio Metro-Goldwyn-Mayer agreed to extend a debt forbearance to March 31, which gives the studio more time to find a buyer.

The extension, which was expected, exempts the studio from interest payments. The amount was not disclosed.

The lenders took this action in support of the company's efforts to strengthen its financial position and to facilitate the company's ongoing process of exploring strategic alternatives, which include continuing to operate as a standalone entity and evaluating a potential sale, MGM said in a statement on Friday.

Metro-Goldwyn-Mayer, which received several first-round bids in an auction, also said it has moved on to the second round and is conducting due diligence with select bidders, and that process is expected to run for the next several weeks.

MGM is considering a prepackaged bankruptcy along with a sale, sources familiar with the matter have said.

The move would offer a healthier company to any buyer of MGM, which has $3.7 billion in debt, by reducing liabilities and cleaning up its balance sheet, the sources said.

Initial bids, including from Time Warner Inc and Lions Gate Entertainment Corp , had come in at under $2 billion, the sources told Reuters.

MGM is owned by a group including private equity firms TPG, Providence Equity Partners, DLJ Merchant Banking Partners and Quadrangle Group and media companies Sony Corp <6758.T> and Comcast Corp .

The studio has a library of more than 4,000 titles, including the James Bond and Pink Panther franchises.

(Reporting by Alex Dobuzinskis; editing by Carol Bishopric)