Parretti Brought Financial Woes to MGM, Ladd Testifies
The chairman of MGM-Pathe Communications Co. testified Thursday that the studio was in financial distress from the moment Italian financier Giancarlo Parretti acquired it.
In a hearing to decide who controls the beleaguered studio, veteran studio executive Alan Ladd Jr. said MGM had to postpone distributing three films and halt production on another because of insufficient funds.
Further, Ladd testified in a Delaware Court of Chancery, the once-fabled studio reneged on letters of credit with actors Sean Connery and Tom Selleck, who, respectively, starred in MGM’s “The Russia House” and “Quigley Down Under.”
It was not apparent from court testimony whether the two actors failed to receive compensation for their work. Howard Weitzman, an attorney for Ladd, did not immediately respond to telephone call seeking comment.
When Ladd tried to contact Parretti and his colleagues about these and other fiscal problems, he was either unable to reach the shadowy businessman or rebuffed.
“I was being lied to all the time,” Ladd said. “They kept saying, ‘The next day, the next day, the next day.’ ”
Ladd’s testimony came in the first week of a three-week trial where MGM’s largest creditor, Credit Lyonnais Nederland N.V., is trying to gain formal control of the studio.
The bank took studio management away from Parretti and gave it to Ladd as part of a corporate governance agreement.
Ladd said Parretti explained that when he took possession of the studio he inherited $60 million to $70 million in debts. Concerned that film production and distribution might be imperiled, Ladd went to Parretti, whom he quoted as saying, “‘Not to worry.”
But he needed to worry, Ladd testified. The old bills prevented MGM from releasing such films as “Delirious,” “Thelma and Louise” and “Life Stinks.” Of those three, only the critically acclaimed “Thelma and Louise” has been a moderate financial success.