Details Delay Pathe Purchase of MGM/UA

Pathe Communications Corp.’s planned purchase of MGM/UA Communications Co., scheduled to close Friday, was postponed until Tuesday as discussions over final details continued.

Meanwhile, investor Kirk Kerkorian said in a telephone interview that he will retain no stake in MGM/UA when the transaction is completed. Asked how much of his MGM/UA stake he would sell, Kerkorian said, “The whole thing, 100%.” Kerkorian, who controls about 86% of MGM/UA’s shares, previously said he might keep some interest in the merged companies.

Kerkorian stands to receive about $996 million of the $1.3 billion that Pathe will pay for MGM/UA. The charitable Lincy Foundation, of which Kerkorian is a director, will get about $108 million.

Spokesmen for both MGM/UA and Pathe downplayed the significance of the delay. The companies issued a statement late Friday saying the closing was postponed “in order to complete the transfer of funds necessary to consummate the merger and to permit finalization of closing documentation.” A Pathe spokesman added that the companies “are confident the funds will be in place and the merger will close by Tuesday.”

The spokesmen would not discuss the details yet to be resolved. Financial analysts speculated that the hang-ups have to do with the sheer complexity of the deal, whose terms have not been fully disclosed.

Pathe announced Monday that it had deposited the $967 million needed to complete the deal into an escrow account. The remaining funds were deposited earlier.

MGM/UA’s board has agreed to help finance the deal by paying Pathe $700 million for certain European theaters, completed films and other assets. Pathe has also announced that it will sell domestic television rights to about 1,000 films in its United Artists library to Turner Broadcasting System Inc. in a deal worth a reported $150 million to $200 million.

Time Warner Inc. has also agreed to pay more than $125 million for the worldwide video distribution rights to existing and future Pathe and MGM/UA films.

Alan Citron reported from Los Angeles and Robert E. Dallos from New York.