Paretti tries to prevent MGM cinemas sale

JAMES BETHELL

and DAVID HELLIER

Giancarlo Paretti, the controversial Italian financier and former Savoy waiter, is attempting to prevent the pounds 200m sale of MGM cinemas.

He is due to issue a writ in the Los Angeles Supreme Court on Tuesday seeking an injunction to halt the auction of the 150-cinema chain.

But Mr Paretti's action may be too late. Sources close to the sale said last night that the announcement could come this weekend.

Mr Paretti's action is part of a $4bn claim against the French state bank Credit Lyonnais, which owns the MGM cinema chain.

Jay Coggan, the Los Angeles lawyer representing Mr Paretti, said last night: "We are disputing the right of Credit Lyonnais to sell the cinemas and are seeking an injunction to stop the auction as soon as possible."

A spokesman for SG Warburg, which is handling the sale for Credit Lyonnais, rejected any suggestion that the writ would jeopardise the sale.

"Credit Lyonnais are unaware of any such potential legal action and consider it unlikely to have any effect on the auction process," a source said. "Mr Paretti serves writs on anyone he can think of and we are not worried by the possibility of this one."

Credit Lyonnais inherited the cinema chain, one of the biggest players in the British cinema market, after Mr Paretti's purchase of the separate MGM studio in Hollywood, for $1.3bn.

Mr Paretti's empire crumbled, and Credit Lyonnais picked up control of the studios and the cinemas. The cinemas came under Credit Lyonnais' ownership for $212m last year, part of a complex restructuring deal.

Since then the sale has been dogged by a number of unexplained delays.

Last night one of those close to a potential purchaser said: "If there's an injunction granted, then there will be no sale."

City observers have wondered at the handling of the sale by the scandal- ridden French bank. Most recently, disruption has been caused by the French election, which resulted in the departure of senior staff.

Now the sale is threatened just as City rumours suggest it is on the brink of completion.

However, a source close to one of the bidders suggested that it was not the outcome of the legal action that worried potential buyers as much as the costs of fighting the Italian entrepreneur in the American courts.

Disputes about the legal liabilities of any purchaser were at the heart of many of the delays, the source added.

Of the front runners to buy the cinema chain, Carlton Communications, was last week cleared to bid. The leisure group Rank Organisation is its main rival. Virgin, which has also expressed interest, has indicated it is prepared to raise its offer.