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G. 1993 Financial Restructuring
After the foreclosure, MGM was a tarnished brand. As a
maker of motion picture products, it was minimally competitive.
MGM had effectively gotten out of the television business and had
no activities in ancillary media such as interactive and video
games. MGM had a substantial film library, including the
considerable UA library, but it was not aggressively exploiting
it. MGM’s financial position was precarious. It was functioning
on a credit facility that CLBN had granted in an emergency
fashion. Although the facility was supposed to be in the $150
million range, CLBN’s exposure had risen to half a billion
dollars. MGM needed additional funding for its production
activities. This funding came directly or indirectly from the
Credit Lyonnais group. The Credit Lyonnais group meanwhile had
already invested approximately $1.6 billion in MGM-Pathe,
including amounts that it had lent to Pathe, to various entities
in connection with Pathe’s acquisition of MGM-Pathe, and to MGM-
Pathe.
Credit Lyonnais determined that it needed to maintain MGM’s
operations to increase MGM’s value. Because it appeared
impossible to sell MGM under satisfactory conditions, it was
necessary to rebuild it, which required both time and financial
means. Consequently, effective April 1, 1993, CLBN provided MGM
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