Rumors of an MGM/UA Sale Circulating Again

Kirk Kerkorian appears to be making new efforts to sell all or a major part of MGM/UA Communications, despite contrary indications a month ago.

A spokesman for Kerkorian, who owns 82.4% of the publicly traded Beverly Hills firm, declined all comment on reports published Monday in the Hollywood trade papers that Sony Corp. of Japan has been negotiating with the entertainment company. A Sony spokesman in New York did not return telephone calls.

However, an industry source reported seeing selected MGM/UA financial data last week that was purportedly prepared in the past two weeks to show to potential buyers.

Meanwhile, the company’s stock has risen 20% to $14.25 a share since Nov. 10 on rumors that a major sale may be in the works. Analyst Jeffrey Logsdon of Crowell, Weedon & Co. in Los Angeles said he thinks the company is overpriced at $14 a share.

An MGM/UA production executive voiced support Monday to the growing theory that Kerkorian’s hiring of investment bankers last month to operate the company and the refilling of major production posts has put the company on a better footing to appeal to outside interests.

Although noncommittal about any Sony talks, the executive said that there was an “obvious possibility” of a sale and that “everything seems to be in place” for one.

In the past year, there have been recurrent rumors that Sony is close to buying one of several movie studios, including MGM/UA and Columbia Pictures.

Kerkorian, who acquired control of Metro-Goldwyn-Mayer nearly 20 years ago, has made an almost legendary career out of splitting up and reformulating MGM and United Artists, while selling major assets such as the MGM’s film library and its famed Culver City studio.

He almost sold 25% of MGM last summer to entrepreneur Burt Sugarman and producers Peter Guber and Jon Peters. But after top management and production executives left MGM/UA in anticipation of the big change, the deal embarrassingly fell through, leaving the company in disarray.

Kerkorian started to reverse that on Sept. 27 by announcing plans to raise $200 million in new capital from present shareholders, meaning mostly from himself. He also decided to produce future pictures only through the MGM and said he might sell “certain” assets.

But Stephen Silbert, then acting chairman of MGM/UA, denied at that time that the sale of either MGM or UA was any longer under consideration.

Two weeks later, Kerkorian installed as chairman Jeffrey Barbakow, a vice president of Merrill Lynch Capital Markets in Los Angeles, who brought lieutenants Kenin M. Spivak and Trevor Fetter aboard with him. Silbert is to move to a position at Kerkorian’s private holding company, Tracinda Corp., but has remained at MGM/UA for a transition period.

When hired, Barbakow said he would implement the plans announced by Kerkorian on Sept. 27. Among other things, the company has since lopped about 130 employees off its payroll.

A month ago, The Times quoted sources as saying that Kerkorian had turned down an offer of more than $1 billion for the company from a firm based in the principality of Monaco.

However, MGM/UA under Barbakow has given no public indication that it is seeking to sell the company. A fresh crop of selling rumors pushed the stock up again on Nov. 10, when it rose $1.375 a share to $13. After subsiding a bit, the stock rose another $1.375 last Thursday to $13.375 and climbed again Monday to $14.25.