Ending one bruising legal battle as he girds for another, Las Vegas financier Kirk Kerkorian on Friday settled for cash a pair of multimillion-dollar lawsuits stemming from his 1990 sale of the MGM/UA studio.
The settlement for a reported $125 million clears the deck for Kerkorian to pursue what some analysts believe will be a second takeover run at Chrysler Corp.
A spokesman for Credit Lyonnais, the French bank that sued Kerkorian in federal and state courts in Los Angeles over the MGM deal, said the initiative for the settlement came from Kerkorian's side. The financier's legal representatives did not respond to requests for comment Friday.
The bank spokesman would not confirm the settlement figure, saying only, "The bank is very pleased with the settlement." No terms were officially disclosed.
Settlement of the lawsuits removes one possible distraction facing Kerkorian as he gears up for a new battle with Chrysler Corp. Working with former Chrysler Chairman Lee Iacocca, Kerkorian earlier this year mounted and then dropped a takeover bid for the company. Kerkorian has acquired 14.1% of the car maker's stock.
Since then he has continued to rattle Chrysler management by suggesting he may start a proxy fight to win a seat on its board and by hiring Jerome York, a former top Chrysler executive, as vice chairman of his own holding company, Tracinda Corp. Chrysler has lashed back, attacking Kerkorian for a "negative campaign" aimed at discrediting the company and undermining Chairman Robert J. Eaton.
The lawsuits whose settlements were announced Friday both stemmed from Kerkorian's 1990 sale of the historic studio to Pathe Communications Corp. and its owner, the shadowy Italian businessman Giancarlo Parretti. It was the second time Kerkorian had sold the studio; in 1986 he had combined his holdings in MGM and United Artists and sold them to Ted Turner for $1.5 billion.
Five months later he bought back all of MGM/UA except for MGM's classic film library for $480 million. He then cut the deal to sell MGM/UA to Pathe for $1.3 billion.
However, that transaction was jeopardized when Time Warner Corp. withdrew its agreement to finance the sale by lending Parretti $650 million.
Kerkorian salvaged it by selling off licensing rights to the UA film library--repository of such popular fare as the James Bond films and several Woody Allen productions--for $625 million. He transferred that sum to Parretti in return for Pathe assets that MGM valued at $625 million but that were worth a fraction of that.
The upshot, the bank said, was that Parretti paid more than $1.3 billion to Kerkorian to buy an MGM mortally crippled by the sale of its principle revenue-producing assets. Credit Lyonnais had lent Parretti $1.1 billion in connection with the deal, and when Parretti defaulted in 1992 it ended up with 98.5% of the gutted studio. Under federal law the bank is required to sell MGM by the spring of 1997.
A state court lawsuit filed by Credit Lyonnais was dismissed last year, as was a counterclaim by Kerkorian that Credit Lyonnais had misled him about the terms of its financing for Parretti. Credit Lyonnais' appeal of that dismissal remained alive in the state Court of Appeal, however, until the just-announced settlement.
The bank's lawsuit in federal court was nearing trial within two months, according to a bank spokesman.