The on-again, off-again sale of The Weinstein Co. is off again after the investor group that was negotiating a deal for the company said it was pulling the plug on the deal after receiving “disappointing information,” The New York Times reports.
“The investor group, led by Maria Contreras-Sweet, who ran the Small Business Administration under President Barack Obama, and the Weinstein Company’s board announced last week that an agreement to buy most of the assets of the near-bankrupt studio had finally been reached,” The Times notes. “The deal called for the group to pay off the Weinstein Company’s debt, which it believed totaled around $225 million. In return, the group would receive the majority of the studio’s assets, which include ‘Project Runway’ and a 277-film library.”
The Times adds: “But once the buyers began confirmatory diligence on the deal, they discovered that the Weinstein Company had more debt than they had been led to believe, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss confidential information. Additional liabilities totaling between $55 million and $65 million were discovered, including $27 million in unpaid residuals and profit participation; and $20 million in accounts payable.”
Along with Contreras-Sweet, the investor group includes billionaire Ron Burkle and Lantern Capital, a Texas private-equity firm.
In a statement released by the group, Contreras-Sweet said: “I believe that our vision to create a women-led film studio is still the correct course of action. 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.”
The Los Angeles Times adds: “The latest development increases the likelihood that Weinstein Co. will file for bankruptcy protection and casts additional uncertainty over the fate of the company’s estimated 130 employees in New York and Los Angeles.”