Buyers strike 'potential deal' to save Weinstein Co. from bankruptcy
Group of investors agreed to purchase Weinstein Co. assets 'in order to launch a new company'
The Weinstein Co. might be saved from bankruptcy after all.
A group of investors, led by businesswoman Maria Contreras-Sweet, said Thursday that it has revived a potential deal to buy the assets of the beleaguered film and TV studio, which has been beset by lawsuits stemming from the sexual assault and harassment allegations against its deposed CEO, Harvey Weinstein.
Just four days earlier, the Weinstein Co. announced it was pulling out of the sale and would file for bankruptcy protection, releasing a scathing statement accusing the buyers of failing to live up to commitments and imposing untenable conditions. But the two sides soon returned to talks, along with New York State Attorney General Eric Schneiderman, who filed a lawsuit against the company three weeks ago that threw a wrench in the deal.
"Our team is pleased to announce that we have taken an important step and have reached an agreement to purchase assets from The Weinstein Company in order to launch a new company," Contreras-Sweet said in a statement.
The announcement was the latest twist in the Weinstein Co.'s tortured efforts to survive the scandal that brought down its namesake co-founder, once a Hollywood mogul who dominated the independent film scene in the 1990s and early 2000s. Dozens of women, including prominent actresses, have accused Harvey Weinstein of sexual assault, harassment, groping and other misconduct. He has denied all allegations of assault.
Contreras-Sweet's announcement came after she met with the company's co-founder, Bob Weinstein, at Schneiderman's office, according to several people familiar with the negotiations. Also at the talks were another board member of the Weinstein Co. and billionaire investor Ron Burkle, whose private equity firm, Yucaipa Cos., would have a key stake in the new company.
The Weinstein Co. did not return requests for comment.
Contreras-Sweet's statement said there was a "potential deal," and it was unclear if major sticking points remained. One person involved in the talks said no concrete agreement had been reached, and that lawyers for the two sides were still in a room hashing out differences after Contreras-Sweet released her statement.
$220M in assets, $225M in debt
But another person familiar with the negotiations said the two sides agreed to a 40-day closing process. The person said the deal includes financing for the Weinstein Co. to meet payroll, rent and other financial obligations while the sale is being finalized.
The buyers would pay $220 million US for most of the Weinstein Co. assets and assume about $225 million of the studio's debt. The new company would also dedicate $90 million to compensate Harvey Weinstein's accusers, including $60 million put up by the buyers and $30 million from insurance proceeds. The person also said the buyers intend to retain company's approximately 150 employees, though personnel decisions will be made later in the process.
My statement on the agreement to sell The Weinstein Company’s assets: <a href="https://t.co/YF4XPtQGZ5">pic.twitter.com/YF4XPtQGZ5</a>
—@AGSchneidermanThe people declined to be identified because they were unauthorized to speak publicly about the private talks.
Contreras-Sweet's proposal has emerged as the Weinstein's Co.'s best chance to remain mostly intact, although under new leadership and with a different name. Some advocates for Harvey Weinstein's accusers, including lawyer Gloria Allred, have also championed the sale as the best chance for the women suing the company to get financial compensation, since bankruptcy proceedings would put secured creditors first in line for payments.
Contreras Sweet, who headed the small business administration during the Obama administration, has no previous entertainment experience but her proposal beat out several other prominent bidders who were mostly interested in buying parts of the company out of bankruptcy.
Compensation for victims
She has proposed remaking the company into a women-led venture, with a female-majority board of directors. But Schneiderman objected to the deal out of concerns that there insufficient guarantees of compensation for the victims. He also said the deal would potentially keep in place top executives accused of enabling Weinstein's alleged abuse of the company's female employees.
The lawsuit launched three weeks of fraught, behind-the scenes talks to revive the sale, with several unreleased films hanging in the balance, including the Thomas Edison tale The Current War, with Benedict Cumberbatch, and Mary Magdalene, starring Rooney Mara.
Days after Schneiderman's lawsuit, the Weinstein Co. fired its president and former COO, David Glasser. Contreras-Sweet's group, in private talks with the attorney general, ironed out a deal to alleviate his concerns, including setting the $90 million compensation fund.
Then, the Weinstein Co. abruptly pulled out on Sunday, saying Contreras-Sweet's group had failed to commit to badly needed interim funding. The company said it had no choice but to file for bankruptcy protection — only to quietly return to talks days later.