MGM ‘Actively’ Exploring Sale of United Artists Unit
MGM/UA Communications, which has dickered off and on with potential buyers of the company since last summer, came out Tuesday and specified that it will “actively” explore a sale of its United Artists division.
However, Jeffrey C. Barbakow, chairman and chief executive, stressed in a telephone interview that no such deal is in view. He said an adviser has been hired to screen potential purchasers, including those who have contacted the firm in past months.
The Beverly Hills motion picture firm, which is 82% owned by financier Kirk Kerkorian, reportedly negotiated fruitlessly last fall with Japanese giant Sony Corp. and also rejected a $1-billion bid from a Monaco entity. Last July, a deal to sell a 25% interest in a spun-off MGM to a group led by financier Burt Sugarman fell through.
Kerkorian is considering another complex financial shuffle to accomplish the sale. According to Tuesday’s communique, this might involve the sale of the entire MGM/UA. But present shareholders--including Kerkorian--would at the same time repurchase “an interest in a new company which would be created by retaining certain MGM assets.” That firm would distribute films and TV programming through UA.
What would end up being sold would be all UA assets, including rights to more than 4,000 films in its valuable library, and film production, marketing and distribution operations, as well as television and home video distribution operations and merchandising activities.
MGM/UA detailed the plan as part of an announcement that it has repaid its $265-million revolving bank debt, largely through the sale of $180 million of redeemable preferred stock to Kerkorian. Observers say this should help make the firm more attractive to prospective buyers.
The company hired Merrill Lynch Capital Markets, from which it recruited Barbakow and two aides last fall, as adviser in connection with the “potential sale.”