Is this good or bad?
A deal to sell the Weinstein Co. to an investor group led by billionaire Ron Burkle has collapsed, according to his partner, Maria Contreras-Sweet.
“We have received disappointing information about the viability of completing this transaction,” Contreras-Sweet said in a statement Tuesday. “As a result, we have decided to terminate this transaction.”
The failure of the deal likely means that the Weinstein Co. will be forced to file for bankruptcy protection in the coming days. The studio behind “The King’s Speech” and “The Artist” has been teetering on the brink of financial ruin after numerous allegations of sexual abuse and harassment allegations its co-founder Harvey Weinstein were made public in October.
In a memo to employees, chairman Bob Weinstein said he would explore options outside of bankruptcy. He also denied a report that the company would fail to make payroll.
“I’m sorry for the terrible news that just came out,” he wrote. “There was an article in Deadline saying payroll won’t be met — that is untrue. There are other options we are seeking outside of bankruptcy that may come to fruition. The board is continuing to pursue those options. I will update you on a more frequent basis if I can.”
Burkle and Contreras-Sweet announced last Thursday that they had agreed to a $500 million transaction with the Weinstein Co. board. But since then, the investors have uncovered new information about previously undisclosed liabilities, according to a source familiar with the transaction. Those liabilities included $27 million in profit participation and residuals, $20 million in accounts payable, and a $17 million commercial arbitration award. That brings the debt level to nearly $290 million, according to two individuals familiar with the deal.
Burkle and Contreras-Sweet had been told by the Weinstein Co. that their debt levels were in the $225 million range. The would-be buyers informed the indie studio’s leadership that they were pulling out of the pact on Tuesday.
In a public statement, the Weinstein Co. board blamed Contreras-Sweet and Burkle for the collapse of the agreement.
“The investors’ excuse that they learned new information about the Company’s financial condition is just that — an excuse,” the board said. “The Company has been transparent about its dire financial condition to the point of announcing its own LIKELY bankruptcy last week. We regret being correct that this buyer simply had no intention of following through on its promises. Nevertheless, this Board will not quit. We will continue to work tirelessly — as we have for months — to determine if there are any viable options outside of bankruptcy. In the meantime, we continue to pursue an orderly bankruptcy process to maximize the Company’s value.”
Burkle and the board have also sparred over the issue of interim payments to keep the company afloat while the sale was pending. That issue had caused the negotiations to fall apart on Feb. 25, after Burkle’s team balked at the board’s demand for $7 million in upfront cash. At a marathon 12-hour negotiation with New York Attorney General Eric Schneiderman last Thursday, Burkle instead agreed to fund the company’s operations week by week.
An initial payment — thought to be about $1.5 million — was due Tuesday. But the two sides continued to haggle over the exact dollar amount. They also involved Schneiderman’s office in the dispute, sources tell Variety.
In a statement, the attorney general’s office said its lawsuit against the Weinstein Company and co-founders Bob Weinstein and Harvey Weinstein “remains active” and said its investigation is ongoing.
“We’ll be disappointed if the parties cannot work out their differences and close the deal,” Schneiderman’s office added.
The deal was especially vulnerable to collapse because there is no breakup fee. In the early stages of the negotiations, the two sides had agreed to a $50 million breakup fee, which Burkle’s team would pay to the Weinstein Co. if the deal fell apart during the closing process. That would have provided a powerful incentive for the buyers to close.
But after Schneiderman’s office filed a discrimination lawsuit against the Weinstein Co. on Feb. 11, raising fresh allegations that the board had enabled Harvey Weinstein’s abuses, the terms changed. Burkle and his partner, Maria Contreras-Sweet, paused the negotiations, and when talks resumed, they said they were no longer willing to agree to a breakup fee.
It appears the Weinstein Co. now has little option except to declare bankruptcy. The company has been in a state of suspended animation since the Weinstein scandal broke last fall. Its ranks have dwindled from 150 employees last fall to less than 100 now.
In her statement, Contreras-Sweet said she and Burkle would consider buying Weinstein Co. assets out of bankruptcy.
“I believe that our vision to create a women-led film studio is still the correct course of action,” she said. “To that end, we will consider acquiring assets that may become available in the event of bankruptcy proceedings, as well as other opportunities that may become available in the entertainment industry.”
Burkle and Contreras-Sweet were set to inject $275 million in equity into the reorganized company, and had agreed assume $225 million in Weinstein Co. debts. The money remains in place, according to an insider, and is possible that the partners could use the money to either buy parts of the Weinstein Co. or buy other film and television companies. If the partners do buy Weinstein Co. assets, they will create some kind of compensation fund for alleged victims of Harvey Weinstein’s harassment and abuse.
Updated: 5:00 pm ET
Updated: 6:20 pm ET with a statement from Bob Weinstein.
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- anncstiles says:MARCH 6, 2018 AT 8:08 PMREPLYREPORT COMMENT
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- Lisa says:MARCH 6, 2018 AT 2:03 PMREPLYREPORT COMMENT
- Silent Velcro says:MARCH 6, 2018 AT 2:03 PMREPLYREPORT COMMENT
I just got paid $2,521 working off my computer this 1st week. & if you think that’s supper, my divorced friend has twin toddlers and made over $2,634 her Second week. It feels so amazing profiting when other people have to work for so much less. Go to the WEB LINK,….. BizInfo30.Com
Who proofread this article?
wow – a shocking new movie!
I’m not too savvy a business person. If you are, explain this to me: What on earth would be the purpose of buying this company? It bears a now forever tainted name. What would anyone turn it around to becoming? Is this a Kafka novel? The company wakes up one morning to inexplicably find itself turned into something else? (Well, Weinstein does play a pretty good cockroach). Why not just buy up the office furniture and start a new film production/distribution choice that new talent will run to? Harvey: look what you did to your company, to the film industry, to real people who happen to be actors and technicians, who have lives. My god. How can you live with yourself?
As the Weinstein Company goes, so goes Hollywood.
Okay,do any of you understand that Weinstein Company is worth a lot? The person who said they make worthless film’s is completely wrong. This company has produced more Oscar winning films in than any other independent film company. It’s like 88 Oscars. Yes HW is pig and not a classy guy. But to say his company is a pile of s__t is not accurate. I work in the industry and I know many Actors who would get naked in a hot tub with a Big Time Producer if they thought it’d get them a few million dollar’s and kick start their career. Not defending HW but c’mon, All of you would jump in if there were millions of dollars sitting on the table. Get real peeps. hw is going down but that doesn’t mean he wasn’t the “Master Of The Game”. If it wasn’t him it woulda been some other schmuck. I guarantee all of you have a fave movie that belongs to TWC. Buy the company all of it’s assets IP’s and change the damn name#
Ron Burkle? Of Air F**k One? Bill Clinton’s pal? Real estate pals with Clooney & Mike Meldman? His jet was used to haunt Kazakhstan? The Burkle who colluded with Meldman to use Holder/Clinton/Obama influence a judge in Montana to keep Blixseth in jail as they bought the Montana resort cheap from under him? The same thing is happening here. They negotiated, reneged, going to force him into bankruptcy, then they’ll buy cheap from under him. I hate Weinstein as much as the next guy and relish his demise, but this pattern of Clooney related Clinton/Clooney bs? And look at the lawyer involved…Eric Schneiderman? WTF
Why would anyone be interested in this company? I certainly would not want to own something that a pig like Harvey started.
Just let beIN buy it already
The Weinstein brothers, the managers and the board are personally liable and worth hundreds of millions. The victims should sue them into oblivion.
If you see sexual predation at your workplace report it. If the company does nothing then report it to the government. If the predator is stopped after his first victim the company will survive. If he’s allowed to prey on victims with impunity the company and your job may not survive. If you’re too narcissistic to care about the victims know that your job is in jeopardy too.
Just a nothing studio with nothing movies made for losers.
Not a single decent movie in its entire life.
Just shut the losers down.
OMG. Just give it up already. Has nobody ever heard of bad karma? Nothing good will come of this. Quit beating a dead horse.
So someone buys the cursed company, then what? To turn it around? God knows what the books really look like.
Sociopaths aren’t known for their responsible financial behavior.
So just lower the purchase price to $435M and call it a deal. Bankruptcy serves no one.
There’s nothing left. Ergo, bankruptcy. The pig ran it into the ground. Anyone who buys it is just plain stupid.
Bankruptcy is the worst possible outcome, Lis. Silent Velcro has the right idea. I’d lowball them now. Come in around 300. The company owns some solid IP, so for the right price, the buyer could make that money back and then some. Granted, we’re talking a long game on this one, but if it was added to the right portfolio it’s FAR better than bankruptcy.
I think the problem now is some of the ego’s on the current board. Good thing in this situation is that they’re now extremely desperate. So if you were in the position to buy this sunk ship, you could level some karmic justice on them by beating them up on the price.
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