Kerkorian May Sell Stake in MGM/UA

MGM/UA Communications created a stir last week by saying that unidentified prospective buyers had made overtures to the company. But it never hinted whether its 82%-shareholder, financier Kirk Kerkorian, would be willing to sell.

Apparently, he is.

Kerkorian and his wholly owned Tracinda Corp. on Monday notified the Securities and Exchange Commission that they “are giving consideration to disposing of all or a portion of their holdings in the company.”

Meanwhile, the Beverly Hills-based company disclosed in a separate SEC filing that it needs to “significantly increase” its borrowing capacity above the $200-million limit set by its bankers. As of Feb. 29, the company owed a total of $552 million, or more than twice its total shareholder equity of $265 million.

No fresh clues were divulged about the identity or nature of the interested buyers. As previously reported, three directors were appointed to a committee last week to weigh the incoming queries.

In the SEC filing, Kerkorian and Tracinda said they would take into account their evaluation of MGM’s “business and prospects, other available business opportunities, general economic conditions and money and stock market conditions.” As of April 6, MGM said it had borrowed $189 million from its bankers. The company said it also needs to amend the net worth requirements set by its bank agreement. At the end of February, MGM/UA had a net worth of $152.8 million--slightly above the $147.7-million net worth required.

The Beverly Hills-based company noted that it is not yet possible to determine the terms, “if any,” under which it can increase its line of credit.

MGM/UA Communications was formed scarcely two years ago, with certain key assets that had once belonged to MGM/UA Entertainment, a predecessor company sold to Turner Broadcasting System. Kerkorian repurchased the United Artists film library for $480 million, and later also repurchased such MGM assets as the names and logos, as well as the television and motion picture projects then in development or scheduled for release.

So far, the studio’s biggest box-office hit is “Moonstruck,” which won three Academy Awards on Monday night.

On the New York Stock Exchange, MGM/UA shares dropped 35.5 cents to close Monday at $14 on sales of 284,200 shares.