MGM/UA Reports Loss of $39.5 Million in Quarter

Jeffrey Barbakow, the new chairman and chief executive of MGM/UA Communications, presided Tuesday over his first stockholders meeting, where the highlight was the announcement of a $39.5-million net loss in the fiscal first quarter.

But shareholders on hand showed no discernible concern over the state of the company, in contrast to many past sessions for the movie firm. Financier Kirk Kerkorian has long controlled the company and frequently has reshuffled and sold major assets.

One possible reason for rank-and-file unconcern: MGM/UA’s stock has been buoyed since last summer by recurrent rumors of a sale of all or a substantial part of the company. The stock has been trading recently at about $14 a share, about double its 52-week low of $7.125.

Barbakow had to field only three questions from the floor Tuesday after the formal part of the session. Of those inquiries, only one was substantive--asking when the company would return to profitability--and Barbakow said he was not allowed to answer it because the company is “in registration” for a pending sale of $200 million of stock to current stockholders. Kerkorian dominates the firm with his 82% interest.

$200-Million Infusion

Barbakow, an investment banker hired by Kerkorian last October from Merrill Lynch Capital Markets, told the meeting that the company’s restructuring was progressing apace. Along with the $200-million infusion of capital from shareholders, he said, MGM/UA expects to announce next week an additional plan to help wipe out its entire $270-million bank debt.

The company presently is basking in the unaccustomed role of having the top-performing movie playing in U.S. theaters, “Rain Man,” with Dustin Hoffman and Tom Cruise.

Nevertheless, in the fiscal quarter ended Nov. 30, the company continued to take major writeoffs from its theatrical film operation for the second straight quarter.

In addition to movies in release--particularly a box-office failure with the lugubrious title “Last Rites”--the writeoffs also included some projects in development.

Kerkorian had abruptly ashcanned a number of movie production deals after a plan to sell a major part of MGM collapsed ignominiously.

After the meeting, Barbakow declined to give specifics on the writeoffs, except to say that they included “Last Rites.” Part of the loss was attributed to higher interest expenses, which rose by $5 million to a total of $16.2 million for the quarter.

The net loss contrasted with a $2-million profit in the previous year’s first quarter. The company reported a net loss of $48.7 million for all of fiscal 1988, of which $37.9 million was in the fourth quarter.

Slate of Films Outlined

Barbakow said the company’s impending financial transactions will significantly improve its cash flow and working capital to fund film and television production and other activities.

To the accompaniment of a lengthy film trailer, Barbakow outlined MGM/UA’s slate of films scheduled for later release. Most are to be shown in fiscal 1989.