Parretti Loses a New Round in MGM Case

Italian financier Giancarlo Parretti suffered a further setback Friday in his bid to regain control of MGM-Pathe Communications Co., which he purchased for $1.3 billion last year.

A Netherlands court ruled that Credit Lyonnais Bank Nederland, Parretti’s chief backer in the MGM deal, had the legal right to recall $358 million in loans to another Parretti company, Melia International. The bank could lay claim to MGM-Pathe’s shares, which Melia pledged as security, if the ruling stands.

Credit Lyonnais told the Rotterdam court that Melia had not made required interest payments on the loan. Melia attorney Rudolf Polak said the company was considering an appeal to a higher court.

At the same time, Melia said it had suspended Parretti from its management board. The company said Parretti made “a number of important decisions” without consulting other board members. Three other board members, including Parretti’s wife, were also suspended.

Parretti owns 51% of Melia, a holding company with interests in communications, real estate, travel agencies and hotels. In a formal statement Friday, Parretti said he would appeal the court ruling, but did not address the issue of his suspension.

“We believe today’s ruling in Rotterdam District Court is incorrect and are taking actions to begin the appeal process,” Parretti said. “The Rotterdam suit is another in a long line of attempts by Credit Lyonnais to take control of MGM-Pathe and we will continue to defend our rights vigorously.”

Credit Lyonnais, which has a longstanding relationship with Parretti, has said in the past that it has $888 million in outstanding loans to Parretti-controlled companies.

Credit Lyonnais took control of MGM-Pathe earlier this year, when the studio fell into financial turmoil. The bank removed Parretti from the MGM board of directors on grounds that he had called an illegal board meeting and violated an agreement not to interfere with day-to-day management of the studio.

Parretti claimed that he was unlawfully removed. A Delaware court judge is scheduled to issue a ruling in the dispute in the next two weeks.

In a separate matter, MGM-Pathe’s parent, Pathe Communications Corp., said it was unable to file a quarterly financial reports because of the ongoing litigation with Credit Lyonnais. Pathe said it did not have access to MGM-Pathe’s financial records.