Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 142

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          Credit Lyonnais group.  MGM-Pathe’s weak financial condition was            
          well-known in the entertainment industry and made it harder to              
          attract film talent to MGM.                                                 
               E.  Facility Agreements with CLBN                                      
               On March 22, 1991, Pathe and MGM-Pathe entered into a so-              
          called $250 million interim revolving credit facility with CLBN             
          (the $250 million facility), which incorporated all of MGM-                 
          Pathe’s borrowing from November 1, 1990.14  All borrowing under             
          the $250 million facility was at the absolute discretion of CLBN            
          and was secured by MGM-Pathe’s assets and Pathe’s interest in               
          MGM-Pathe stock.                                                            
               On March 29, 1991, a group of MGM-Pathe’s creditors                    
          (excluding CLBN) filed an involuntary chapter 7 bankruptcy                  
          petition in U.S. Bankruptcy Court.  To pay off its creditors                
          (other than CLBN) and allow it to emerge from bankruptcy, MGM-              
          Pathe entered into a so-called $145 million facility agreement              
          (the $145 million facility agreement) with CLBN dated as of April           
          12, 1991.15  Borrowing under the $145 million facility agreement            
          was secured by MGM-Pathe’s assets, as well as the stock of Pathe            
          and MGM-Pathe.  As a result of the new financing, MGM-Pathe was             

               14 The name of this agreement did not necessarily control              
          the amount that was advanced under the agreement.                           
               15 The name of this agreement did not necessarily control              
          the amount that was advanced under the agreement.  Amounts                  
          available under the $145 million facility agreement were in                 
          addition to amounts available under the $250 million facility.              





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