MGM holds on to 'Hobbit' rights

MGM has secured financing to move forward with its two-part adaptation of The Hobbit.

Recent reports surfaced claiming that the studio had been threatened with bankruptcy and needed a $170 million cash injection to continue operating through to the end of the year.

According to The Hollywood Reporter, the cash-strapped studio has entered into a forbearance agreement with its lender group. Under the terms of the deal, MGM will forego interested payments - due for September 30, October 31, and November 30, 2009 - on its $3.5 billion debt.

The first interest payment will be made on December 15, allowing MGM to free up funds to continue with its production slate.

The Hobbit, to be directed by Guillermo del Toro and produced by Peter Jackson, is MGM's first priority. The big-budget fantasy film is expected to go into poduction in 2011.