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C. Investigation of MGM
Mr. Lerner was involved in investigating New MGM. Mr.
Lerner testified that he spent nearly a week in the data room of
New MGM and talked to various members of New MGM’s corporate
management team regarding their view of the company and its
future. In the course of this investigation, Mr. Lerner received
an MGM Corporation Information Memorandum and a confidential
memorandum that Lazard Freres had prepared in connection with the
sale of New MGM. Safari hired Deloitte & Touche, LLP, and the
law firm of Kaye, Scholer, Fierman, Hays & Handler, LLP (Kaye
Scholer), to assist in investigating New MGM.
On May 14, 1996, Deloitte & Touche submitted its preliminary
data room due diligence observations to Safari. This document
explained the process and procedures followed in Deloitte &
Touche’s investigation of MGM, including its review of the
information in the New MGM data room. It also identified certain
open issues with respect to MGM.
On May 15, 1996, Kaye Scholer submitted its preliminary
memorandum to Safari summarizing its legal due diligence
investigation of New MGM. Kaye Scholer reviewed: (i) The
corporate organization of MGM, MGM’s principal subsidiaries, and
MGM Group Holdings; (ii) chain-of-title documentation for the
available portion of New MGM’s film library and other product-
related documents; and (iii) historical information for the MGM
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