Credit Lyonnais has filed a second suit in state court repeating claims made in a federal complaint against former MGM owner Kirk Kerkorian and adding Giancarlo Parretti as a defe ndant.
The Los Angeles Superior Court suit seeks at least $ 500 million in damages for the defendants’ alleged coverup in 1990 of the true financial condition of both MGM/UA Communications Co. and Pathe Communications Corp., a company controlled by Parretti that acquired MGM/UA in a deal financed by Credit Lyonnais.
Also named as defendants are former MGM/UA chief executive officer Jeffrey Barbakow, former senior executive vice president Stephen Silbert, and the accounting firm of Houlihan Lokey Howard & Zukin. MGM filed a separate Superior Court suit against the same defendants (except Parretti) Monday alleging breach of fiduciary duty that sought at least $ 750 million.
The new Superior Court suit charges fraud, conspiracy to defraud, and misrepresentation because the defendants “knew or should have known” that the surviving company following the merger of MGM/UA and Pathe would not be financially viable and that revenue projections provided to the bank were “wildly over-optimistic.”
Parretti, Kerkorian, Barbakow and Silbert allegedly “conspired” to provide Houlihan Lokey with cash flow projections that were “intentionally inflated” despite the fact that both MGM/UA and Pathe “had been consistently losing money for the past five year s” and the company faced a cash shortfall of $ 250 million after the merger in November 1990.
According to the suits, Kerkorian and his Tracinda Corp. (also a defendant) got approximately $ 1 billion in the deal. Barbakow realized $ 33 million and Silbert $ 6 million, the suits said.
Credit Lyonnais said it gave up pre-existing collateral valued by the MGM/UA officers at at least $ 625 million and accepted stock in the new company instead after it got a solvency opinion from Houlihan Lokey based on the alleged misinformation.
The suits also seek unspecified punitive damages.