Kerkorian May Sell Film Production Unit

Controlling stockholder Kirk Kerkorian, who has had MGM/UA Communications on the auction block for the past two months, now is said to be considering a sale of one of its two movie production companies.

Since the entertainment firm reported April 6 that it had received inquiries from interested buyers, no deal has been forthcoming. The company has never identified the potential buyers, which reportedly have included Japanese and Dutch firms.

Kerkorian is expected to disclose today the latest wrinkle in his position. According to a source familiar with the situation, the financier will amend his report to the Securities and Exchange Commission of early April, which said he was “giving consideration” to selling all or part of his 82% stake in MGM/UA.

The amendment reportedly will say he is also considering “proposals for a restructuring of the company that could involve the sale of one of the company’s production units, together with certain other assets, and to distributing to stockholders all or a substantial amount of the proceeds.”

Since Kerkorian owns 82% of the publicly traded company, he would receive the lion’s share of such a cash distribution.

Kerkorian has made a career and a lot of money in the past two decades by buying, selling and rebuying assets of the old Metro-Goldwyn-Mayer and United Artists studios.

The latest version of the company was formed just two years ago, after Kerkorian sold MGM/UA Entertainment to Atlanta broadcaster Ted Turner and simultaneously bought back United Artists’ distribution operation. Several months later, Kerkorian repurchased the UA film library for $480 million and subsequently bought back the MGM name and logos.

MGM/UA stock was trading at $13.625 a share when the company announced inquiries from interested buyers in early April. The shares closed Monday at $16.50, up 25 cents, on the New York Stock Exchange.

MGM/UA executives were reported to be pleased Monday with the third week of box-office results of its major movie release “Willow,” which added about $5 million to the previously reported $18.6 million in grosses.