What Makes Giancarlo Run?

Even by Hollywood standards for intrigue, Giancarlo Parretti is a mogul wrapped in mystery. A former waiter who has been accused several times of financial transgressions in his native Italy, Parretti aroused suspense and ( skepticism last month when he disclosed his agreement to buy MGM/UA Communications for $1.2 billion from financier Kirk Kerkorian. But Parretti, 49, befuddled his doubters last week when he persuaded Time Warner to guarantee a $650 million loan to help his Los Angeles company, Pathe Communications, carry out the deal. "Who would ever have imagined that Pathe would buy MGM? Nobody!" exults Parretti. "Everybody laughed when I first mentioned it."

The loan guarantee came just ten days after a Naples court had sentenced Parretti to three years and ten months in prison for fraudulently declaring the bankruptcy of a chain of Italian newspapers in 1981. The court ruled that the financier had falsified figures on the newspapers' balance sheets. Parretti remains free while he appeals the conviction, which could take several years. In an interview last week in his Beverly Hills office, the brash mogul dismissed the case as "una buffonata -- a joke!"

A former headwaiter in the Sicilian city of Syracuse, Parretti ventured into business in the 1970s by acquiring three hotels in the region. People who wondered where he got the money speculated that his source was the Mafia, a rumor he denies. Parretti was later accused of falsifying the balance sheet of a Syracuse soccer team and was charged with fraud in the failure of a Palermo savings bank. Neither allegation stood up. During the 1980s, the flamboyant Parretti built a fortune, evidently by taking over and restructuring troubled European banks and insurance companies. At the same time, he became partners with Florio Fiorini, chairman of Sasea Holding, a Swiss investment firm, in ventures ranging from travel to real estate.

Parretti plunged into show business in 1988, paying $200 million for the Cannon Group, a faltering ministudio in Los Angeles. He paid $160 million later that year for French-held Pathe Cinema, the owner of 1,500 European movie theaters. By adding MGM/UA, Parretti plans to create a global entertainment empire.

In return for its financial support, Time Warner will gain access to 3,000 films in the Pathe and MGM/UA libraries, which the company will distribute worldwide through theaters, TV and videocassettes. Among the movies: West Side Story, Midnight Cowboy, Annie Hall and the James Bond, Pink Panther and Rocky series. Time Warner has agreed to help Parretti arrange to borrow an additional $200 million to produce new Pathe and MGM/UA films, which Time Warner would help distribute.

Time Warner's involvement drew mixed reviews. One research firm, Standard & Poor's, noting that the new financial commitment came on top of $10.6 billion that the company borrowed in last year's merger of Time Inc. and Warner Communications, placed some $7 billion of Time Warner bonds and preferred stock on S&P CreditWatch. That status means the company will keep a close eye on Time Warner to determine whether its credit rating should be downgraded, which would increase its cost of borrowing.