KICKING AND CLAWING FOR THE MGM LION
Parretti and Credit Lyonnais duke it out over MGM
Well-connected banking lobbyist Robert S. Royer never paid much attention to the goings-on in Hollywood. But that changed one evening last summer as he sat smoking cigars on the porch of fellow bank lobbyist James J. Butera's home. The two Washington insiders mulled over Butera's tricky new assignment: to quietly amend U.S. banking laws so that his new client, French state-owned bank Credit Lyonnais, can avoid an onerous May, 1997, deadline for selling Metro-Goldwyn-Mayer Inc.
These days, Butera and Royer are locking horns instead of smoking cigars. Butera has succeeded in getting a provision added to a pending bill that would give Credit Lyonnais until 2002 to sell the studio it took over from Giancarlo Parretti in 1992. But Parretti, the controversial Italian financier who has been in litigation with Credit Lyonnais over MGM for years, wants a shot at buying back the weak but legendary studio. Parretti hired Royer last December to derail Credit Lyonnais' lobbying gambit. The battle is heating up as the bill containing Credit Lyonnais' amendment gains momentum for passage, and the French bank's behind-the-scenes legislative remedy has turned into an increasingly noisy fracas.
DEADLINE DANCE. Certainly, the French would benefit from extra time. The studio, nearly bankrupt when the bank took control, has enjoyed a recent string of hits, such as Get Shorty, Leaving Las Vegas, and The Birdcage. With those successes giving MGM a boost, Lazard Freres & Co. began shopping it to potential buyers on Mar. 12. The bank, which has about $2 billion invested in MGM, hopes to sell for at least $1.5 billion. But the looming deadline puts it in a weak negotiating position. Credit Lyonnais and Butera declined to comment for this story.
So Credit Lyonnais is doing all it can to avert a shotgun sale. Last March, it transferred about $27 billion of mostly troubled assets--including MGM--to Consortium de Realisation, which is also overseen by the French government. The French hope this removes the studio from the bank's books. But the Federal Reserve Board, which regulates Credit Lyonnais in the U.S., has not yet indicated whether the maneuver puts MGM out of Fed jurisdiction.
Then in July, two House members added Butera's amendment to a pending banking bill. Without naming Credit Lyonnais, the provision allows domestic and foreign bank holding companies to hold foreclosed assets for up to 10 years instead of 5. In September, a similar provision was attached to the Senate's banking bill. Curiously, a panel staffer says no one can recall if any senator specifically promoted the fix.
Since then, the battle has grown increasingly ugly. In January, Royer complained to the Justice Dept. that two partners at the law firm of White & Case, which represents Credit Lyonnais in its litigation against Parretti, have been illegally lobbying for the bank without registering as foreign agents. The firm says it broke no laws.
BROAD SUPPORT. As Credit Lyonnais and Parretti duke it out on Capitol Hill, the banking bill may be poised to move. Congressional staffers say the broad regulatory-relief bill, which cuts paperwork and some potential legal liabilities for banks, has broad support and could be passed quickly by Republicans looking to rack up some legislative accomplishments. Royer has been busy trying to create a fuss about Congress helping out a foreign bank. He's betting few if any lawmakers will argue on Credit Lyonnais' behalf.
But lawmakers are just as reluctant to come to the aid of Parretti. His iffy history includes a conviction, now under appeal, in Italy involving currency transactions. Notes one Senate staffer: "This is more like a family feud than a public policy debate."
And what a family it is. Poor MGM has been battered over the last few years as it has been bought, sold, and foreclosed upon. With this latest wrangling between its current and past owners, MGM doesn't look like it will be rid of these characters for some time to come.By Amy Barrett in WashingtonReturn to top