Credit Lyonnais, the longtime film industry banker and owner of MGM/UA, reported a massive 6.9 billion francs ($ 1.2 billion) loss for 1993 and warned Thursday that it will not be developing new business in the cinema world.

The results were much worse than expected. Analysts had predicted net losses up to 5 billion francs ($ 862 million). They follow 1992 losses of 1.8 billion francs ($ 310 million). Total provisions for losses rose to 17.8 billion francs ($ 3 billion). New provisions in 1993 to cover the film industry were valued at 2.3 billion francs ($ 396 million).

Senior officials at the French government-owned bank blamed the red ink on the continued recession, the depressed property market and previous bad investments — including those in the film industry.

Thursday’s announcement isn’t expected to have a significant new impact on the Hollywood film community, since Credit Lyonnais has stayed away from the movie-lending business since it got mired in MGM’s complicated finances a couple of years ago.

But the losses spurred new speculation that the bank might try to unload MGM before May 1997, when it must sell the studio under U.S. laws forbidding banks to own corporations. CL execs repeated that the studio is not for sale yet — adding however that the bank has been approached recently by French conglom Chargeurs, as well as other Euro companies — about buying MGM.

CL’s place as a key film lender has been taken by a variety of other banks, including Banque Paribas, ING of Paris and Rotterdam, Daiwa and Chemical Bank. But most of those institutions have lent on a project-by-project basis, rather than establishing big corporate accounts, as Credit Lyonnais did with, say, Giancarlo Parretti, who briefly owned a controlling interest in MGM.

The bank’s latest results came 48 hours after bank chairman Jean Peyrelevade concluded negotiations with the French government on a multibillion-dollar rescue package for Credit Lyonnais that’s designed to clean up the bank’s books before privatization.

Peyrelevade refused to openly criticize his predecessor, Jean-Yves Haberer, for the current mess, but when asked to compare the latest results with 1992, he suggested that last year’s were far from reality.

Presenting his first annual report since his appointment in November, Peyrelevade said the government has agreed to take 40 billion francs ($ 6.9 billion) of non-performing property loans and put them in a new shell company. The loans would be guaranteed by the state for the next five years and not reflected in the bank’s results during that period.

In addition, Credit Lyonnais will ask its three shareholders (the state, the huge Thomson electronics group and state-owned financier Caisse des Depots) to pump fresh funds into the bank via a 4.9 billion franc ($ 844 million) capital increase within the next few months. Peyrelevade said he hoped to raise a similar amount through a second capital increase later in the year.

A somber Peyrelevade predicted some 3,500 job cuts in France over the next three years and said the bank would ditch another 900 European staffers this year. He added that he had ordered zero growth in the group’s operating expenses this year.

Those measures, coupled with attempts to sell at least 20 billion francs ($ 3 .4 billion) of financial investments over the next two years, should bring Credit Lyonnais to break-even by December and produce profits in 1995, according to Peyrelevade.

The Credit Lyonnais topper said he expected the bank to be privatized in the next two years. Asked if MGM will be sold before privatization, he replied, “I haven’t asked myself that question. It is premature.” Under U.S. law, Credit Lyonnais must find a buyer for the Hollywood major in May 1997, five years after taking control from Parretti.

The bank took over MGM in May 1992 after its Credit Lyonnais Bank Nederland subsid bankrolled Italian financier Parretti’s short-lived acquisition of the studio. Last July, the bank launched a multimillion-dollar rescue program overseen by studio topper Frank Mancuso, who joined the company at that time.

The bank is hoping that Mancuso’s distribution expertise, as well as the spate of new appointments to key posts in MGM and United Artists, will turn the studio around so that it is a salable commodity. “I think our strategy is the only one possible,” said Peyrelevade.

Since it took over MGM, Credit Lyonnais has been irritated by continued suggestions that it is about to unload the Hollywood facility. Francois Gille, CL’s general manager and the man trying to sort out the film portfolios, repeated Thursday: “MGM is not for sale.”

But Gille did say that he has talked to several interested parties, including the French textiles and communications group Chargeurs. He said such discussions were more in the line of inquiries rather than bids for MGM. “A lot of people want to know what is happening at MGM. The answer doesn’t change: Not for sale now.” He denied recent reports that Credit Lyonnais had entered confidential discussions with Polygram.

Commenting on reports that the French government would like Credit Lyonnais to eventually find a European buyer for MGM, Gille replied that the bank’s principal concern is to get the best price possible and that if the best offers came from Chargeurs or the Bertelsmann group, they would be accepted.

In overall film investment, Gille said there has been no improvement since last year, when he estimated that out of some 200 dossiers, 35 required writedowns. “The major improvements have been in the refinancing of MGM and Carolco. In general, we are not developing this field of our activities.”

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