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Kerkorian, the majority shareholder of MGM/UA, entered into a
series of transactions with Turner Broadcasting System (TBS),
resulting in TBS’s acquisition of the pre-1986 MGM film library.
See, e.g., Turner Broad. Sys., Inc. & Subs. v. Commissioner, 111
T.C. 315 (1998). MGM/UA Communications Co. (MGM Communications)
was formed out of the remaining assets of MGM and UA, including
the UA film library. In 1988, MGM Communications began to
explore selling all or part of these assets.
B. Pathe Acquisition of MGM
In June 1990, the board of directors of MGM Communications
agreed to sell the company for approximately $1.33 billion
(excluding certain additional costs) to Pathe Communications
Corp. (Pathe), which was indirectly controlled by Giancarlo
Parretti and Florio Fiorini.13 Pursuant to this agreement, MGM-
Pathe Communications Co. (a wholly owned subsidiary of Pathe)
merged with and into MGM Communications (the 1990 merger). The
surviving corporation was MGM-Pathe Communications Co. (MGM-
Pathe). As a result of the 1990 merger, Pathe owned 98.5 percent
of MGM-Pathe stock.
C. Sealion Corp.
In connection with Pathe’s acquisition of MGM, Credit
Lyonnais lent $150 million to Sealion Corp., N.V. (Sealion)
13 To finance this purchase price, Pathe Communications
Corp. relied, in part, on its available lines of credit from
CLBN.
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