Company Town : MGM Gets $350-Million Line of Credit From Banking Syndicate : Financing: Deal with Chemical Bank will help studio fund ambitious production slate.

In one of the most meaningful steps yet in its nearly year-old comeback campaign, Metro-Goldwyn-Mayer said Monday that it has negotiated a $350-million line of credit with an international banking syndicate led by Chemical Bank that will help it fund production and distribution.

The deal is important to the Santa Monica-based studio for two reasons. While the studio does not need the money immediately, it provides another major source of backing for its ambitious production slate, which is aimed at returning MGM to the ranks of the major studios.

In addition, it gives MGM a much-needed psychological boost. The funding from such banks as Wells Fargo, Bank of America and North Carolina’s First Union and Chemical represents a major vote of confidence in MGM’s comeback strategy, which includes reviving its television business and expanding into such areas as interactive media.

“MGM wanted to be able to tell the world that this business plan stands on its own two feet,” said John Miller, a managing director at Chemical, which is serving as administrative agent.

Bank of America and Bank of New York will serve as managing agents. Others in the group as co-agents are Bank of Boston, ING Capital Corp., National Westminster Bank, Sumitomo Trust & Banking and Union Bank. MGM and Chemical officials said demand was heavy for the deal and that it was oversubscribed.

Significantly, the list of banks does not include MGM’s parent, French bank Credit Lyonnais. MGM Chairman Frank Mancuso confirmed that Credit Lyonnais had been invited to join the banking group but preferred to stay out of the deal, partly to send a message that the studio is not entirely dependent on the bank.

“The company is not totally reliant on its shareholder,” Mancuso said.

Credit Lyonnais inherited MGM in 1992 when the bank foreclosed on Italian financier Giancarlo Parretti. U.S. banking laws require that the bank divest the studio by 1997.

Mancuso, who formerly headed Paramount Pictures, was named nearly a year ago to run the studio while Credit Lyonnais cleaned up MGM’s balance sheet by forgiving about $800 million in loans to the studio and agreeing to provide $400 million a year in operating funds. The bank is being advised on its MGM strategy by Creative Artists Agency Chairman Michael S. Ovitz.

Part of MGM’s plan since restructuring was to attract outside financing, which could happen only after its balance sheet was cleaned up. Mancuso said he is particularly pleased with the new arrangement because it shows that the banks believe the studio still has valuable assets in its 1,800-film library, which he argues is not nearly as encumbered as many people believe.

The Chemical deal has been in the works since January. Talks included unusual private meetings between each bank and studio managers led by Mancuso. Typically, such meetings are held with groups of bankers.

The financing comes as MGM is just a few months away from the release of the first films from its new regime, which also includes MGM Pictures chief Michael Marcus and John Calley, head of its United Artists Pictures.

The first film is expected to be the Christmas release of “Speechless,” starring Michael Keaton and Geena Davis.

The studio’s summer has been mixed so far. The family film “Getting Even With Dad,” starring Macaulay Culkin and Ted Danson, proved a disappointment, but the action film “Blown Away,” with Jeff Bridges and Tommy Lee Jones, gave MGM its biggest opening box office numbers in at least a decade.