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Credit Lyonnais Posts $1.2-Billion Loss; Bailout Planned

March 25, 1994|From Times Staff and Wire Reports

French state bank Credit Lyonnais, owner of Santa Monica-based Metro-Goldwyn-Mayer, said its net loss more than tripled to about $1.2 billion in 1993 and disclosed a state-engineered bailout.

A bank spokesman said the loss--the largest in French banking history--was mainly due to real estate problems, with a relatively small amount set aside for problem entertainment loans. Credit Lyonnais has been plagued by losses on loans in the 1980s to a batch of now-defunct or ailing Hollywood companies.

In the state-sponsored bailout, Credit Lyonnais will receive an infusion of $833 million with a possible second infusion later in the year. Under the plan, nearly $7 billion in bad real estate loans were taken off Credit Lyonnais books and put into a state-controlled shell company.

The net loss was higher than predicted by most banking analysts. It compared with a loss of about $320 million in 1992. The bank, however, said it expects to be close to break-even this year, with a return to profit in 1995, and said it expects profits to reach more normal levels in 1996.

Credit Lyonnais has until 1997 to sell MGM, which it took over in 1992 after former owner Giancarlo Parretti defaulted on loans made by the bank. The bank is currently trying to rebuild the studio under a new management team led by former Paramount Pictures Chairman Frank Mancuso, former Creative Artists Agency agent Michael Marcus and former Warner Bros. executive John Calley. The bank is being advised on MGM by Creative Artists Agency Chairman Michael S. Ovitz.

The French government, which owns a majority of Credit Lyonnais, plans to privatize the bank, probably next year or in 1996. The moves to clean up the bank's ailing balance sheet are being made in part to improve its financial condition once that happens.

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