Parretti Has MGM-Pathe Bid--or Does He?

In the latest bizarre twist in the fight for control of the beleaguered MGM-Pathe studio, ousted owner Giancarlo Parretti said Friday that he had a $1-billion offer from a “wealthy Middle East businessman” to buy the company, but that his bank refused to go along with the deal.

Credit Lyonnais Bank Nederland, which took control of the studio earlier this year after Parretti fell behind in his loan payments, attacked Parretti’s statement as “absolutely false” and said no evidence could be found to verify the existence of the so-called Saudi prince.

Meanwhile, Chancellor William T. Allen, the judge presiding over the bank’s suit against the Italian financier in Delaware Chancery Court, reaffirmed Friday that he will proceed with a hearing Wednesday to determine whether a document Parretti used in his defense had been forged, as Credit Lyonnais contends.

The suit alleges that Parretti meddled in the studio’s affairs after he agreed to step aside last April.

Next week’s hearing is crucial, said MGM-Pathe attorney Howard Weitzman, because if the judge determines that the document was fabricated, then “he could reject Parretti’s defense. But more importantly, it could be evidence of perjury.”

In a letter to Judge Allen, attorneys for Parretti’s Pathe Communications Corp., the parent company that holds 98.5% of MGM-Pathe’s stock, said the terms of the proposed deal included an investment of about $1 billion, including more than $300 million in working capital.

A Parretti spokesman also said that the Italian financier would remain an investor in and officer of MGM-Pathe.

Parretti bought MGM in November, 1990, from financier Kirk Kerkorian for $1.3 billion and renamed the company MGM-Pathe Communications Co.

Since then, the studio has been plagued by mounting debt, unpaid bills and a string of box office flops.

Credit Lyonnais officially has $395 million in loans to MGM-Pathe, but the giant French bank’s exposure to Parretti is believed to be upward of $800 million when other loans to Parretti affiliates are included.

A spokesman for Parretti said the offer from the Middle Eastern businessman would retire all loans made by Credit Lyonnais to Parretti and his affiliates.

The bank, in a statement, called Parretti’s report of an offer a “bogus smoke screen” to avoid next week’s court hearing on the allegedly forged documents. It also said the proposed agreement called for the Middle Eastern businessman to be paid $12.5 million in fees up front. But Credit Lyonnais said it “has been unable to find any evidence of who he is and what investors, if any, he represents.”

The Parretti spokesman said the only reason for Credit Lyonnais to delay the proposed transaction was in hopes of a favorable judgment from the Delaware court, which would give the bank majority control of Pathe Communications and MGM-Pathe. As of Dec. 1, Credit Lyonnais had the right to sell 51% of Parretti’s stake in MGM-Pathe.