UPDATED: The investor group led by former Small Business Administration chief Maria Contreras-Sweet is closing in on an acquisition of Weinstein Co. valued at around $500 million, with some backing from financier Ron Burkle.
The Contreras-Sweet’s group has been in the hunt for Weinstein Co. for the past two months. In recent days, the group came to the banker handling the sale, Moelis & Co., with another pre-emptive offer with what a source described as “improved terms” designed to avoid any kind of bankruptcy proceedings for the company, which has been in a tailspin since co-founder Harvey Weinstein was accused of rape and assault by multiple women in October. That new offer prompted Moelis to enter into an exclusive negotiating window with Contreras-Sweet.
The sides had gone back and forth on setting an exclusive negotiating window for the past two weeks but only entered into the agreement on Tuesday.
Burkle’s Yucaipa Co. will provide some financing but is described by a source as a minority investor with around 20%-25% of the equity. The new proposal has been structured to set aside money for restitution to Harvey Weinstein victims, pay off creditors and lenders as well as keep most of the company and its employees intact. Bob Weinstein, co-founder and brother of Harvey Weinstein, is expected to leave the company and take the assets of the Dimension Films genre banner that he has long steered.
A source familiar with the bid said the plan is to assume all of TWC’s liabilities, inject fresh capital into the company and pay down its considerable debts. TWC is undoubtedly in for a slew of lawsuits from victims of Harvey Weinstein. The bid is said to include as much as $30 million for a victims restitution fund and banks on TWC’s existing insurance policies to help cover future claims. Contreras-Sweet has vowed to assemble a new board of directors that would be majority female.
There’s still no word on who would actually run the day-to-day operations — whether Contreras-Sweet or another leader — and how much of TWC’s existing senior management would stay in place. The detailed reports on how Harvey Weinstein used TWC staffers and resources to facilitate his alleged sexual misconduct has cast a shadow over senior executives who could have been in a position to know about such behavior and questionable company expenditures. Harvey Weinstein has denied having any sexual encounters that were not consensual.
Burkle’s past association with TWC and Harvey Weinstein in particular has raised questions of whether his involvement of the deal flies in the face of Contreras-Sweet’s stated goal of rehabilitating the TWC assets by bringing female leadership to the company that has become synonymous with sexual harassment in Hollywood. Burkle’s son Andrew is believed to work for TWC in its Beverly Hills office.
Moelis & Co. declined to comment. Reps for Contreras-Sweet declined to comment while a rep for Burkle did not respond to requests for comment.
Harvey Weinstein was fired from his post as co-chairman of TWC in October and he also stepped down as a board member. It believed that the sale will not provide any windfall to TWC’s existing shareholders, a list that includes the Weinstein brothers and longtime TWC investors WPP and Goldman Sachs.
Other contenders for TWC assets have included Lionsgate, MGM, Killer Content (with backing from Abigail Disney), Shamrock Capital Advisors, and Miramax parent company BeIn Media Group. There had been rumblings that the Weinstein brothers had been trying steer a sale to Miramax in an effort to reunite their TWC and Miramax (the company they founded in 1979 and later sold to Disney) legacies in the hopes of eventually returning to the combined company.
Deadline first reported Contreras-Sweet’s move into an exclusive negotiations with Moelis and TWC.