The Bidding for MCA : Parretti’s Offer Revives Questions of His Resources and Track Record

With his surprise 11th-hour offer for MCA Inc., Italian financier Giancarlo Parretti has once again stirred questions about his financial resources and his track record of making unsuccessful bids for Hollywood properties.

The 49-year-old Parretti, who is chairman of MGM-Pathe Communications Co., submitted his offer for MCA on Monday only hours after the company agreed to be acquired by Matsushita Electric Industrial Co. for $6.59 billion. Details of his offer were not disclosed, although a source says the bid was not a detailed, formal document but a brief letter faxed to MCA headquarters in Universal City.

Representatives of MCA and Parretti would not comment Wednesday. However, those familiar with the bid said it would not halt Matsushita, which is set to begin its formal tender offer for MCA shares on Friday.

Three years after he arrived in Hollywood with a bankroll and hopes of building an entertainment empire of theaters, film libraries, TV and movie studios, Parretti--a onetime waiter and son of an Italian olive merchant--still engenders skepticism.

After paying $200 million in 1988 for control of the Cannon Group film studio, Parretti last year bid unsuccessfully for three struggling independent studios: New World Entertainment, De Laurentiis Entertainment Group and Kings Road Entertainment.

Earlier this month, Parretti did succeed--after straining nearly a year--in completing the $1.36-billion purchase of the former MGM/UA Communications Co. But financial details of that transaction--a complex package of loans and advances--remain murky. In view of the financial struggle to buy that company, few believe Parretti can now turn around and purchase MCA.

“Off the record,” said one Wall Street analyst who did not want to be named, “the street thinks it’s a joke” that Parretti is seeking to buy MCA.

Why did Parretti wait until the 11th hour to submit an offer to MCA?

Many analysts and several studio officials interviewed by The Times privately speculate that Parretti may be trying to corner MCA into paying so-called greenmail--or monetary compensation to Parretti for agreeing not to pursue the company and complicating its deal with Matsushita.

An analyst joked Wednesday that any compensation Parretti might receive from MCA “at least would clear up some of the mystery in his balance sheets.”

With each financial pursuit in Hollywood, Parretti has been nagged by reports in Business Week, Newsweek and other publications that question the source of his wealth and his associations. Parretti was convicted of fraudulent bankruptcy in Naples, Italy, this year and has said he is appealing the conviction.

Parretti claims to have made his fortune by buying, restructuring and selling troubled companies in Europe, which included a Dutch theater and real estate company and a movie production, distribution and exhibition firm based in Denmark.

Parretti’s financial dealings also extended outside Europe and the United States to Liberia, where he had investments in a state-run airline and had been negotiating to invest in and manage other government-owned enterprises until former Liberian President Samuel K. Doe was killed by rebels in September.

Despite the wariness of skeptics, a few in Hollywood don’t count Parretti out, even if his bid for MCA seems far-fetched.

“I’m a fan of Mr. Parretti’s, and I think he’s very sincere,” said Jack L. Gilardi, executive vice president of talent agency International Creative Management and a longtime friend of Parretti’s. “I say ‘God bless him,’ if he wants to buy MCA.”

However, any Parretti offer for MCA could spark more than snickers from detractors in investment circles. He could suffer an embarrassing if not financially crippling loss of confidence in Hollywood’s creative community, analysts say.

“I’m sure if MGM-Pathe has the dollars to spend on any particular project” they could get it made, said Jeffrey Logsdon, an entertainment industry analyst at Seidler Amdec Securities in Los Angeles, who doesn’t believe Parretti has made a serious bid for MCA. “But I think there’s always that matter of intangibles and personal relationships” also at work. Parretti could end up, Logsdon said, “alienating powerful people.”

Parretti’s offer seems certain to put him on a collision course with MCA Chairman Lew R. Wasserman and Creative Artists Agency Chairman Michael Ovitz, who are often said to be Hollywood’s two most influential executives.

Ovitz shepherded through the MCA deal for Matsushita. And since he represents a huge roster of entertainers, directors and writers through CAA, he could complicate life for MGM, which is struggling to rebuild its film business under movie executive Alan Ladd Jr. and depends heavily on CAA-represented talent.

Yet Parretti has defied skeptics in the past. As an outsider, who began trying to speak English only two years ago, he seems untroubled by Hollywood’s cold shoulder.

BACKGROUND

Italian financier Giancarlo Parretti was a virtual unknown in Hollywood when he and his partner, Florio Fiorini, purchased the troubled Cannon Group for $200 million in 1988. Cannon was soon merged into Parretti’s Pathe Communications Co., and by spring of this year he was making headlines by offering to buy MGM/UA Communications Co. The $1.36-billion deal, which suffered several setbacks, finally closed this month. Roughly half of the money came from sales of MGM/UA assets, including television rights to the company’s films. But about $700 million remains unaccounted for. Parretti must disclose the source of his funding to the Securities and Exchange Commission by early next year. It is believed that Parretti partially financed the MGM/UA deal by selling off some of his foreign companies. The normally press-shy Parretti has granted only one lengthy interview--to “Lifestyles of the Rich and Famous.”