MGM has landed support from key lenders to allow it to proceed with its participation in The Hobbit, according to The Hollywood Reporter.

A recent proposal by MGM's new CEO Steve Cooper to defer interest payments on its debt load for the next three months on Thursday won a crucial endorsement from J.P. Morgan.

The investment firm leads a lenders steering committee that has been agitating for a dramatic restructuring of the Lion's operations and its ownership structure. In exchange for an agreement to limited interest forbearance, J.P. Morgan secured a few changes in existing debt terms.

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Concern over MGM's hold on Hobbit is at the heart of the activity. In a 50-50 rights partnership with Warner Bros.' New Line unit, two Hobbit pics are being developed.

The first Hobbit aims for theatrical release in 2011, with Guillermo del Toro on board to direct that and a sequel. Peter Jackson, Fran Walsh, Philippa Boyens and del Toro are writing scripts for both and are expected to deliver the first screenplay by the end of November.

Current MGM owners include investment firms Providence Equity and TPG, Sony and Comcast.

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