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Kerkorian Pumps in $180 Million, Outlines Plan for Sale

January 18, 1989

BEVERLY HILLS, Calif. (AP) _ Financier Kirk Kerkorian disclosed he has pumped $180 million into MGM-UA Communications Co. as well as developed a series of intricate blueprints for selling part of the struggling movie company he controls.

MGM-UA, maker of the current box-office hit ″Rain Man″ and TV’s ″thirtysomething,″ announced Tuesday that Kerkorian’s Tracinda Corp. had bought 10 million shares of newly issued preferred stock for $18 a share.

That money, along with $85 million raised through new television licensing agreements and sale of receivables, was used to pay off all of the company’s revolving credit line.

The company also announced it would try to sell the United Artists part of the conglomerate Kerkorian assembled a decade ago from assets of UA and the old Metro-Goldwyn-Mayer studios. UA will be shopped around by Merrill Lynch Capital Markets, the former employer of MGM-UA’s new chairman and chief executive officer, Jeffrey Barbakow.

A sale of MGM-UA would likely take a form similar to a previous deal that collapsed in July: The entire company would be sold, then the MGM studio would be split off, with part being sold back to present shareholders, including Kerkorian.

The company has been saying for months that all or part of MGM-UA was for sale.

Barbakow said various potential byers had expressed interest in the company, but that none had entered negotiations to buy it.

A final aspect of the plan announced Tuesday is a rights offering to shareholders other than Kerkorian, who owns more than 80 percent of MGM-UA stock. Once the offering is approved by securities regulators, shareholders will be allowed to buy additional shares of the Series A Redeemable Preferred stock Kerkorian bought Tuesday.

Analysts found little surprising in the announcement, since both the pending rights offering and potential sale had been discussed previously.

The cash infusion from Kerkorian, by strengthening the company’s balance sheet, could make MGM-UA more attractive to a potential buyer and overcome shareholder reluctance to buy the new preferred stock, said Lee Isgur, who follows the company for PaineWebber in New York.

The convoluted plan to sell the company and then buy back part of it recalls the failed June deal to split off the other half of the company, MGM, and sell a part interest to Hollywood investor Burt Sugarman and a pair of movie producers. That plan, which would have left Kerkorian holding substantial shares of both MGM and UA, collapsed two weeks after it was announced.

″Kirk always does something,″ Isgur said of the latest proposal. ″Kirk Kerkorian gets bored, he likes to do something.″

The UA sale being contemplated would include the movie studio, film and home video rights and UA’s 4,000-title film library that includes the ″Rocky,″ James Bond and ″Pink Panther″ movies, as well as rights to sequels.

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