Bloomberg (Bloomberg) -- Hedge funds often measure their investments in minutes, not decades; but for Anchorage Capital Group, its long-held stake in Metro-Goldwyn-Mayer Studios Inc. is proving that patience can also be profitable.The New York-based money manager stands to make roughly $2 billion on its investment in the film and TV producer, one that began almost 11 years ago with MGM in bankruptcy court. Amazon.com Inc. agreed to buy the company for $8.45 billion Wednesday, a price that includes just under $2 billion in debt.The deal is in many ways a vindication for Kevin Ulrich, the former Goldman Sachs Group Inc. trader who co-founded Anchorage in 2003 and was part of a group of distressed debt investors that took control of MGM as it went through the restructuring process. In recent years the stake looked to be an albatross for the fund, one that came with significant drama in its own right.Ulrich brought in and later fired a high-profile chief executive officer, resisted efforts by activist investor Carl Icahn to take control, and held out for a bigger payday after years of considering various exit strategies. By selling now, as demand for media content from entertainment and technology companies alike is booming, he’s proving his long-held faith in the investment was justified.“There was a lot of maneuvering, a lot of financial engineering,” said Steven Azarbad, chief investment officer at New York’s Maglan Capital, an MGM investor who sold his shares four years ago. “But they’ve done great.”A representative for Anchorage declined to comment.When Ulrich first invested in MGM, he was new to Hollywood. He helped pick Gary Barber, a South African-born producer of films such as “Ace Ventura: Pet Detective” as chief executive officer of the storied but debt-laden studio. Barber brought to the table a shrewd business sense, and connections into a world Ulrich long admired from afar.Barber shepherded MGM’s development of “The Hobbit” franchise, a co-production with Warner Bros., that became a global smash hit. He helmed the release of the James Bond film, “Skyfall,” which generated over $1 billion at the box office, and he revived the studio’s work in television. Barber also brokered a deal to bring on TV super producer Mark Burnett, which gave MGM access to reality show hits like “Survivor” and “The Apprentice,” but would ultimately become personally troublesome.In 2012 the company bought back Icahn’s stock for $590 million. It also filed paperwork for a possible public offering of shares, and considered other options, such as a sale.As Barber boosted MGM’s film and TV pipeline, Ulrich was increasingly entranced by the allure of Hollywood. He became a regular at movie premieres in Los Angeles and New York, and frequented industry parties in the Hamptons and elsewhere. He became active in creative decisions after becoming chair of MGM’s board -- somewhat unusual for a non-executive lacking Hollywood experience -- even getting involved with business granularities like casting.Growing RiftBut over the following years a rift began to open up between Barber and Ulrich. When it was time to renew Barber’s contract in 2017, Ulrich conducted an extensive search for a new CEO. When it ended, he ultimately chose to sign Barber to a new five-year deal. Yet around the same time, the pair split on whether to sell the company, with Ulrich wanting to hang on to the studio and Barber saying it was time to find a buyer.The company would hold buyout talks with Apple Inc. as well as Chinese investors that would ultimately prove fruitless.Only months after renewing Barber’s deal, Ulrich fired him. The shock departure meant the company had to pay Barber for five years of salary and buy out his equity, a package totaling $260 million. In the three years since Barber left, Ulrich hasn’t replaced him, instead operating an “office of the chief executive officer,” comprised of various people that each have their personal vision for MGM.Barber declined to comment via his spokesperson.Bounce BackAfter the initial period of success following the restructuring, the gains became harder to come by, as they did in Anchorage’s overall credit-focused business. Two senior managers left the firm in January 2020, and another in November. Anchorage’s flagship strategy, with about $8.5 billion under management, returned just 0.6% in 2018, 1.5% in 2019 and 4.4% in 2020, according to people familiar with the matter.In December, MGM hired investment bankers for a potential sale.MGM only released one film in theaters in 2020. Its biggest potential hit, the latest Bond film, “No Time to Die,” was pushed from last year to this October as a result of the pandemic.Yet the value of MGM’s library rose as everyone from media companies to technology giants have sought to build video streaming platforms that can compete with industry leader Netflix Inc. Earnings jumped 48% last year, to about $307 million, even as sales declined.Anchorage holds a roughly 30% stake in MGM, worth about $2.5 billion in the sale, said people with knowledge of the matter. Anchorage invested around $500 million in the company more than a decade ago. Including the MGM stake, Anchorage’s flagship fund is up 18% this year, the people added. The fund has gained about 8% in 2021 not counting the studio.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>The Papa John’s board of directors announced late last night that they would be adopting something that’s known in the business industry as a “limited duration stockholder rights plan.” This is an attempt to prevent Papa “John” Schnatter from reasserting his control over his eponymous company, which has done almost everything in its power to distance itself from him after he got racist on a conference call. Advertisement Papa John himself may have been evicted from company headquarters, been removed from marketing materials, and resigned as chairman, but he still has a seat on the board, and, crucially, he and “his affiliates and associates” own 30 percent of the company. The goal of the new rights plan is to keep him and his buddies from acquiring a controlling stake in the company and returning Papa to his throne. The deal contains a so-called “poison pill” provision that kicks in if anyone acquires 15 percent of the company, or if Papa’s group bumps its stake in the company up to 31 percent. If either of those two scenarios happen, then other stakeholders would be given the opportunity to buy up stock at half the normal price, thus diluting the power of whoever is making a power play. “The adoption of the Rights Plan is intended to enable all Papa John’s stockholders to realize the full potential value of their investment in the company,” the press release said. Papa John has been on record many times as saying he got a raw deal; the company clearly expects a fight of some kind. However, when Papas battle, it is the pizza that suffers: Papa John’s stock is tumbling following this latest news.<doc-sep>Anthony Johndrow, a corporate reputation adviser based in New York, said the “poison pill” move is a distinct way for Papa John’s to create space between itself and its fiery founder, but it is not the same as the company taking a public stance against racism or the use of racial epithets. Unlike Dick’s Sporting Goods announcing it would stop selling assault-style rifles after the mass shooting in Parkland, Fla., for example, the “poison pill” move allows Papa John’s to act specifically against Schnatter.<doc-sep>
'Papa John' Schnatter will find it harder to take over the company he founded in 1984, but left last week amid accusations of using a racial slur, as the company adopts a 'poison pill' to prevent a near-term takeover. Poison Pizza Pill? Papa John's International Inc. (PZZA) - Get Report said late Sunday that it will adopt a so-called "poison pill" to avoid outside investors from taking control of the company without compensating shareholders, but added that the current holdings of its controversial founder and former CEO, John Schnatter, would be grandfathered in to the new plan. The strategy, which will trigger once an investor or a group of investors assumes control of 15% of the company, will see each existing shareholder receive the right to one additional share for each outstanding common share. The plan would expire on July 22, 2019, the company said, but will be triggered if Schnatter's stake rises from its current 30%. "The adoption of the Rights Plan is intended to enable all Papa John's stockholders to realize the full potential value of their investment in the company and to protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Papa John's through open market accumulation or other tactics without paying an appropriate control premium," the company said in a statement late Sunday. Papa John's shares were marked 9% lower from their Friday close in Monday trading. The move extends the stock's decline to around 9% since Schnatter's July 11 resignation as group chairman following allegations he used a racial slur during an company conference call. "Papa John's condemns racism and any insensitive language, no matter the situation or setting," the company said in a statement at the time "We take great pride in the diversity of the Papa John's family, though diversity and inclusion is an area we will continue to strive to do better," the company said in a separate statement." Schnatter, who left his CEO role last year following a much-publicised spat with NFL Commissioner Roger Goodell over his handling of the league's national anthem protest controversy, which only days ago drew a fresh response from President Donald Trump. "Schnatter and his affiliates and associates who currently beneficially own shares of common stock in excess of 30% have been grandfathered under the Rights Plan but will become an acquiring person upon their acquisition of 31% or more of our outstanding shares of common stock, subject to certain exceptions as described in the Rights Plan," Papa John's said.