Pathe Gets Extra Four Months for MGM/UA Deal : Entertainment: With Time Warner, its major backer, apparently ready to withdraw its support, the buyout had looked increasingly hard to complete.

With chief backer Time Warner Inc. apparently on the verge of withdrawing its support for the deal, Pathe Communications Corp. on Thursday was forced to obtain a four-month extension on its bid to acquire MGM/UA Communications Co.

Pathe’s new agreement with MGM/UA raises the price of the deal by $100 million, to $1.3 billion. Pathe will increase its payment for all outstanding MGM/UA stock to $21.50 a share from $20 and, in a new element of the sale, MGM/UA will pay its stockholders $4 a share of the purchase price on July 20.

The $4-per-share payment, which comes to about $253 million, will come out of an escrow account into which Pathe already has deposited $200 million in four non-refundable down payments. The remaining $53 million is to be deposited on July 16. Previously, the $200 million in escrow was to be converted into new shares of MGM/UA stock if the original deal did not close by its deadline of Saturday.

MGM/UA controlling shareholder Kirk Kerkorian, who owns 72% of the company, would be the major beneficiary of the $4-per-share payment. Kerkorian also extracted further commitments: Pathe must make two additional nonrefundable down payments of $50 million each, on Aug. 21 and Sept. 20.

Following announcement of the plan, MGM/UA took credit for negotiating a favorable deal for its stockholders. “What we are trying to say is that this is as good a deal, if not better, based on the increase in the price being paid for the company,” said MGM/UA spokesman Scott Tagliarino. “This shows the intentions of the company to complete the sale.”

Analysts, however, were skeptical of Pathe’s ability to meet its new obligation. They questioned where Pathe will find the additional financing needed to close the deal.

“It’s difficult to conceive, with the amount of time the parties have had to work this out, how $21 a share will be more easily attainable than $20,” said Jeffery B. Logsdon of Crowell, Weedon & Co. “My understanding is that the whole process has been somewhat troublesome.”

Time Warner, which had agreed in April to provide Pathe $650 million in financing for the original deal, was not mentioned Thursday in Pathe’s press statement as a party to the new agreement. Pathe did say, however, that discussions with Time Warner were continuing.

Several people close to the discussions said Time Warner has already withdrawn its support for the deal, but Time Warner spokeswoman Marilyn Harris denied that. “We assume the purpose of Pathe’s obtaining the extension is to continue our discussions on how or if they can satisfy the conditions of our agreement,” she said.

Several analysts who have followed the deal said Time Warner is probably delaying a formal announcement of its withdrawal until Saturday--the original deadline to complete the deal.

“Time Warner is party to a transaction that has not been rejected, rescinded or expired,” Logsdon said. “So to make any other comment . . . about the deal’s status would be highly impractical. I do not see Time Warner mentioned as part of the new transaction.”

Pathe Co-President Giancarlo Parretti did not comment on the extension. Pathe spokesman Craig Parsons said the film company remains confident that it will complete the complex acquisition. “It’s just taking a little longer than anticipated,” he said.

In another new wrinkle, Pathe disclosed that it intends to merge a newly formed subsidiary with MGM/UA to complete the buyout. Parsons described that as a minor structural change in the deal.

Pathe’s statement made no mention of Kerkorian’s possible role in the acquisition. Previously, Pathe said he might retain a small stake in the company.

Beverly Hills-based Pathe’s latest extension follows several other delays. At one point, Parretti indicated that he would close the deal in May, during the Cannes Film Festival. Later it became clear that the company was struggling to meet its obligation.

On Tuesday, Time Warner disclosed that the main stumbling block to its participation was Pathe’s failure to fund its part of the deal--$450 million plus $150 million from outside sources--in the form of equity, as the original agreement required.

Pathe had requested permission to pay its portion through a series of short-term loans, asset sales and the sale of some MGM/UA stock. Under the deal, Time Warner was to receive distribution rights to the United Artists film library and future Pathe and MGM/UA releases.

The source of Pathe’s funding for the new deal was unclear Thursday. If Time Warner withdraws as expected, securities analyst Logsdon said it’s doubtful another major film studio would take its place.

“I would find it highly unlikely that any of the other major studios would find it financially equitable to participate,” he said. “I just don’t see that happening again.”