Ron Tutor's acquisition may take another month

Nearly three weeks after the Walt Disney Co. announced it had reached an agreement to sell Miramax for $660 million to a group led by construction magnate Ron Tutor, the financing for the deal is still not nailed down.

It’s considered unusual to have a deal of this scope without first having the financing in place, and it may be at least another month before there is a resolution, said one executive familiar with the negotiations.

That would mean the designated deadline to close the deal of Sept. 7 would be missed. In that case, Disney may have to extend the deadline or perhaps look for new bidders.

The sticking point on the financing front: the value of Miramax’s 600-plus film library, the executive said. To make that calculation, the Tutor camp has hired Mesa Global, which placed a value of $650 million on Miramax, figuring in its library.

Trying to reach a consensus on the worth of Miramax’s catalog has consistently bogged down the sale of the company since Disney began to entertain offers earlier this year. Given the overall decline in DVD sales, it has become much more difficult to place a value on film libraries.

Earlier negotiations over Miramax between Disney and a team comprised of Bob and Harvey Weinstein and financial backers Ron Burkle, Fortress Investment Group and Colbeck Capital reportedly broke down in part over questions about the ultimate value of the library. Their $565 million bid was rejected by Disney.

Tutor and partner Colony Capital are counting on a consortium of banks, led by Comerica and Union Bank, to provide $250 million-$275 million in debt financing to help them seal the deal. But the smaller banks to which Comerica and Union are looking to syndicate the loans, a common practice in film financing, are balking at Mesa’s valuation figure for the library. So nothing has been finalized, and it could be that the banks will be more willing to accept syndicated debt well below the desired $250 million-$275 million. That would require Tutor and Co to provide more equity to get the deal done, raising the question of whether they can make that stretch.

The would-be buyers, which will operate as Filmyard Holdings, said in announcing the deal with Disney on July 29 that they expected the deal to close anytime between September and the end of the year. That was just days after the Tutor group reportedly ponied up a non-refundable $40 million advance payment for Miramax. Neither side will confirm if the cash ever arrived in Disney’s coffers.

It is not clear why Disney chose to announce the Miramax deal without financing firmly in place. A call placed to a Disney spokeswoman for comment was not returned on Tuesday.

The delay in securing financing raises questions as to whether the Weinstein Co. or a previously interested party, the Gores brothers, could re-emerge with a new, unsolicited bid. Harvey and Bob Weinstein sold Miramax to Disney in 1993.

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