Pathe Makes $50-Million Deposit on MGM/UA Deal

Pathe Communications Co. on Friday made the last of its $50-million down payments on MGM/UA Communications Corp., increasing its non-refundable investment to $275 million.

Pathe, which is seeking to acquire MGM/UA for $1.2 billion, was required to deposit the funds by today under the terms of its agreement with MGM/UA. The rest of the money is due by June 23, but Pathe has indicated that it intends to close the deal as soon as next Friday.

With its final deposit, Pathe has pledged $200 million in cash and a $75-million interest in three upcoming films to the ambitious MGM/UA acquisition.

Securities analysts have said they are optimistic that the deal will close, even though Pathe has yet to resolve some key points with its chief financial backer, Time Warner Inc. Chief among them, according to an announcement by Pathe, are concerns about Pathe’s financial health and its ability to fund future film production. At the same time, Pathe made headway on one front when Time Warner agreed to soften the terms of its loan.

Time Warner has agreed to lend Pathe $650 million in return for the distribution rights to the United Artists library and future Pathe and MGM/UA releases. Pathe plans to borrow the balance through one of its holding companies, Comfinance SA of Luxembourg. Pathe, headed by Italian financier Giancarlo Parretti, had hoped to close the MGM/UA deal Thursday. But its problems with Time Warner and a request for additional documentation from the Securities and Exchange Commission made it miss its self-imposed deadline.

Pathe offered to acquire MGM/UA’s outstanding common and preferred stock for $20 a share in March. Majority owner Kirk Kerkorian has been trying to sell MGM/UA for two years.