Despite fresh cash, it's still a jungle out there for MGM lion.

Despite fresh cash, it's still a jungle out there for MGM lion

French bank Credit Lyonnais agreed last week to provide MGM-Pathe Communications Co. with a $145 million cash infusion, a loan that analysts say will contribute toward the movie company's recovery -- but may only be a "Band-Aid."

"It will keep them going for a while," said Emanuel Gerard, an analyst with New York-based Gerard Klauer Mattison & Co., an asset management firm. But the company needs some profit-making pictures, he said.

Beverly Hills-based MGM-Pathe Communications Co., whose MGM operation once roared through Hollywood, is now struggling to stay alive. The company is battling an involuntary bankruptcy petition filed by creditors, facing lawsuits and now is being investigated by the Securities and Exchange Commission.

The new cash will help get some of MGM-Pathe's completed but delayed movies "out the door," mostly by paying for costly printing and advertising for the marketing of the films, said Ned Zachar, an analyst with Duff & Phelps/MCM investment research firm based in Chicago.

Another priority for the company is paying off the creditors that are petitioning to force MGM-Pathe into bankruptcy, said Paul Marsh, an entertainment analyst with Los Angeles-based Kemper Securities brokerage firm.

The remainder of the money will probably be spent on production, Gerard said.

Analyst Marsh speculated that Credit Lyonnais may have agreed to lend MGM-Pathe more money in order to protect its interests, he said. Credit Lyonnais had already lent MGM-Pathe about $2 billion prior to last week's agreement.

MGM-Pathe Co-Chairman Giancarlo Parretti had been waiting for a cash infusion from Credit Lyonnais for more than two months. Credit Lyonnais finally agreed to open its wallet but only under two conditions: that Parretti step down as co-chairman, and that a bankruptcy judge dismiss the suit filed by some of MGM-Pathe's creditors.

Parretti, who was ousted last week as chief executive officer, has been replaced with Alan Ladd Jr., who is one of the company's co-chairmen and is chairman of the film production division.

"Ladd is more respected in Hollywood," said Steven Hill, an entertainment analyst with Sutro & Co., a brokerage investment banking firm based in San Francisco.

Ousting Parretti and bringing in Ladd is a move the company needed to make, Hill said. MGM-Pathe may be able to "slowly come back to life," he said.

The movie and television production company has been faltering since Beverly Hills-based Pathe Communications Corp. agreed to buy Culver City-based MGM/UA Communications in November 1990 for $1.3 billion.

The deal was highly leveraged: about $570 million of the funding was equity from "European interests" of Parretti and MGM-Pathe Co-Chairman Florio Fiorini; $625 million came from MGM itself as the proceeds of the sale to MGM of Pathe stock; and the remaining funds were obtained from lines of credit at Credit Lyonnais Bank Nederland N.V. and from Pathe's working capital.

The newly formed MGM-Pathe began with $1.8 billion in debt on its back, and has been headed downhill since.

Six of the company's creditors filed a Chapter 7 petition on March 29, seeking to force it into involuntary bankruptcy. The creditors claimed they are owed $10 million of the $50 million MGM-Pathe has outstanding to vendors and creditors.

The bankruptcy court judge has not yet reviewed the petition. Since the petition was filed, three or four more creditors have joined in it.

Last week, the Securities and Exchange Commission launched an investigation into the financial dealings of MGM-Pathe. The SEC may be looking into alleged improprieties concerning the merger between Pathe and MGM/UA last fall, Marsh said.

MGM-Pathe has gotten into other entanglements as well. Roger Corman, the largest creditor in the group trying to force MGM-Pathe into bankruptcy, has filed suit against the company for $16 million. The suit alleges the company fell behind on its payments for a deal in which MGM/UA distributes Corman pictures on videocassettes.

Meanwhile, a claim by Australia-based Century Insurance that the insurer owns up to 35 percent of MGM-Pathe's stock was dismissed by a Cook Islands judge last week. But the insurer claims the dismissal was based on a technicality and will be rectified soon.

With MGM-Pathe unable until last week to get a cash infusion from a lender, the company has had to delay the release of 12 films, including "Delirious," "Thelma and Louise" and "Life Stinks," said MGM-Pathe spokesman Craig Parsons.

Since Parretti made his takeover bid for MGM/UA, the company has resembled more and more of a skeleton. The number of employees have been reduced to 700 from 1,000, several divisions were eliminated and rights to the film libraries were sold.

The home video rights to the UA library have been licensed to Time Warner Inc. for the next 12 1/2 years, while the library's television rights have been licensed to Turner Broadcasting System for the next 10 to 12 years. The UA library has 1,000 titles.

The home video rights to the 1,000-title Pathe library, meanwhile, have been sold to Time Warner.

The home video arm of MGM-Pathe has essentially, been disbanded, while MGM-Pathe retains a film production arm, television production arm and its division of theaters in Europe.