Credit Lyonnais backs MGM to tune of dollars 1bn

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The Independent Online
CREDIT LYONNAIS, the French bank, has committed itself to the future of Metro-Goldwyn-Meyer, agreeing to spend the more than dollars 1bn required to prepare the famed Hollywood studio for sale in 1997.

After months of turmoil the bank replaced MGM's chief executive, Alan Ladd Jr, with the Hollywood veteran Frank Mancuso during the weekend and announced plans to revive its sister studio, United Artists.

It will double the dollars 190m credit line that finances the studios' film and television production and officially assume MGM's dollars 800m in remaining bank debt.

Credit Lyonnais, which financed the 1990 acquisition of MGM by the now-disgraced Italian financier Giancarlo Parretti, was awarded control of the studio by a US court last year after Mr Parretti defaulted on his loan agreement.

His collapse left Credit Lyonnais with more than dollars 2bn in liabilities associated with MGM, which continues to lose an estimated dollars 1m a day.

Compounding its financial difficulties, MGM has suffered a succession of box-office failures under Mr Ladd, producing only one big hit, Thelma and Louise, in 1991. Mr Mancuso, 60, was chairman of Paramount Pictures between 1984 and 1991, a period when that studio dominated the industry, releasing such hits as Top Gun, Beverly Hills Cop, The Untouchables and Crocodile Dundee.

Under US law, a bank that takes control of a company - even as a result of foreclosure - must divest itself of the property within five years. But Credit Lyonnais' chief executive, Francois Gille, said the bank was 'committed to rebuilding MGM as the best way to maximise the value of our investment'.

The bank was advised in the deal by Michael Ovitz, the head of Hollywood's most influential talent agency, who will assist Mr Mancuso in hiring new executives for MGM and United Artists.

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