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or cause to be bid-in, at least $400 million of the secured
indebtedness. CLBN also advised Pathe and MGM-Pathe that $400
million would be the minimum bid-in amount and that the sale of
40.2 million shares would be subject to a prior pledge in favor
of Credit Lyonnais, as assignee of Sealion.
Credit Lyonnais formed MGM Holdings Corp. (MGM Holdings) to
effect the foreclosure on the common stock of MGM-Pathe. As of
May 1, 1992, CLBN sold to MGM Holdings approximately $483,489,000
of Pathe’s and MGM-Pathe’s indebtedness.16 Credit Lyonnais
foreclosed on the MGM-Pathe stock to recover amounts that it had
invested in MGM; it was not interested in any long-term
investment in a film business. As a result of the foreclosure,
MGM Holdings owned 98.5 percent of MGM-Pathe’s common stock and
had the power to elect the entire board of directors of MGM-
Pathe. Nevertheless, the Credit Lyonnais group was working on a
5-year time clock from the date of foreclosure, because U.S.
banking laws required the Credit Lyonnais group to sell MGM
within 5 years (i.e., on or before May 7, 1997).
On May 20, 1992, MGM-Pathe changed its name to Metro-
Goldwyn-Mayer, Inc. (MGM).
16 The parties agreed to a purchase price equal to the
aggregate principal amount outstanding on the debt, together with
all interest, fees, and other amounts then due and owing.
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