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confidence in Messrs. Lerner’s and Ackerman’s capital sources and
were not comfortable that their proposed financing from Japan was
going to materialize.
Unbeknownst to Safari, New MGM’s management had the right,
after all the final bids were in, to find another buyer within a
certain number of hours. After all bids were submitted, New
MGM’s management approached Kirk Kerkorian who, through his
company, P&F Acquisition Corp. (P&F Acquisition), successfully
bid $1.3 billion for New MGM. Safari was not given an
opportunity to rebid; it lost out on its attempt to buy New MGM.
On July 16, 1996, P&F Acquisition entered into a stock
purchase agreement (the stock purchase agreement) with CDR, MGM
Holdings, MGM Group Holdings, and New MGM. The stock purchase
agreement provided that all of New MGM’s and its subsidiaries’
indebtedness would be repaid in full upon the consummation of the
sale and that any New MGM indebtedness remaining unpaid would be
satisfied, canceled, or extinguished at or before the closing on
the sale. The closing date was set as of October 10, 1996.
E. Debt Release and Assumption Agreement
As of October 9, 1996, New MGM owed Credit Lyonnais
$378,748,588.93 under the working capital agreement. The $1.3
billion purchase price that P&F Acquisition paid for New MGM
sufficed to pay off all of New MGM’s creditors except Credit
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