×
You will be redirected back to your article in seconds

Weinstein Co. Reaches Deal With Ron Burkle-Backed Investor Group

An investor group backed by billionaire Ron Burkle has reached a $500 million deal with the Weinstein Co. that will spare the troubled company from bankruptcy.

The deal came together in a marathon negotiation Thursday in the office of New York Attorney General Eric Schneiderman. The Weinstein Co. board, including chairman Bob Weinstein, sat down with Burkle and his partner, former Small Business Administration chief Maria Contreras-Sweet, with Schneiderman helping to seal 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, with a new board and a new vision that embodies the principles that we have stood by since we began this process last fall,” Contreras-Sweet said in a statement.

The negotiations continued over minor points even after Contreras-Sweet released her statement. Three hours later, the Weinstein Co. board confirmed the deal.

“We are pleased to announce that we have entered into an agreement to sell the assets of The Weinstein Company to an investor group led by Maria Contreras-Sweet and Ron Burkle,” the board said. “The deal provides a clear path for compensation for victims and protects the jobs of our employees. We greatly appreciate the efforts of Attorney General Schneiderman and his staff, Maria Contreras-Sweet, Ron Burkle and his team at Yucaipa for bringing about this agreement. We consider this to be a positive outcome under what have been incredibly difficult circumstances.”

The deal comes after the transaction nearly died twice in the space of two weeks. On Feb. 11, the buyers almost walked away when Schneiderman’s office filed a discrimination complaint that sought oversight and conditions on the sale. After talks restarted, the Weinstein Co. announced on Feb. 25 that they were backing out and pursuing bankruptcy, and accused Burkle and Contreras-Sweet of failing to negotiate in good faith.

The most recent sticking point was Burkle’s reluctance to provide $7 million in upfront capital to keep the company on its feet while the transaction is pending. A source told Variety that the agreement comes with a 40-day closing period. The interim funding issue has been resolved, according to a source. Another issue was the Weinstein Co.’s refusal to provide an opinion letter guaranteeing that they had the right to sell the company. The concern was that Harvey Weinstein, who resigned his board seat last fall and would see his equity wiped out in the sale, might have standing to contest the transaction.

Following the collapse of the talks over the weekend, Burkle and Contreras-Sweet sought to revive negotiations with the aid of the attorney general. The Weinstein Co. was initially reluctant to reengage, but the company’s employees were angry and fearful of layoffs that would result from bankruptcy.

Schneiderman objected to the original terms of the sale, saying that a proposed fund for Harvey Weinstein’s sexual harassment victims was inadequate. After his intervention, the parties agreed to increase the fund to $90 million. Schneiderman also sought assurances regarding the company’s sexual harassment policies, and had objected to a plan to put David Glasser, the company’s COO under Weinstein, in the CEO role. Glasser was subsequently fired “for cause” by the board, but Burkle has continued to hold out the possibility of keeping him on board.

In a statement on Thursday night, Schneiderman said he was “pleased to have received express commitments from the parties that the new company will create a real, well-funded victims compensation fund, implement HR policies that will protect all employees, and will not unjustly reward bad actors.”

“We will work with the parties in the weeks ahead to ensure that the parties honor and memorialize these commitments prior to closing,” he continued. “Our lawsuit remains active and (the) investigation remains ongoing at this time.”

In addition to Burkle and Contreras-Sweet, other investors include Lantern Capital, based in Dallas, and others yet to be announced. The buyers plan to rebrand and install a female-majority board of directors in an effort to cleanse the stain of the Weinstein scandal. A new name has not been selected, though at one point the investors were said to be leaning toward Wonder Hill.

Burkle, the managing partner of Yucaipa Cos., has dabbled in the movie business in the past, investing in a handful of Weinstein Co. projects. Contreras-Sweet is a Hollywood outsider, without previous experience in the entertainment business. Before serving in the Obama administration, she worked in banking and corporate public affairs, and was an official in the administration of Gov. Gray Davis. She is not particularly wealthy, with an estimated net worth between $326,000 and $815,000, according to her federal financial disclosure reports.

Contreras-Sweet will have the challenge of stabilizing a company that went into freefall shortly after the New York Times reported on Weinstein’s history of sexual harassment on Oct. 5. The company, already ailing, was forced to cancel releases and saw deals for TV shows collapse. The company has been hit with numerous lawsuits from actresses alleging complicity with Weinstein’s harassment, and from business partners alleging non-payment of bills. The company was forced to sell off “Paddington 2” just to make payroll, and its American Express corporate credit cards were frozen.

Under the deal, the buyers are expected to assume $225 million in existing debt under a credit facility. The buyers will also pay out $275 million in equity, of which approximately $100 million will become operating capital for the new company. The balance of the cash infusion will be used to pay off other debts and unpaid bills, as well to establish the settlement fund for Weinstein’s victims. The equity holders of the old company, including WPP and Goldman Sachs, will be wiped out in the deal.

Bob Weinstein will depart the company under the agreement, and take the Dimension brand with him as well as one unreleased film, “Polaroid.” The investor group will take possession of the Weinstein’s Co.’s 277-film library, including the Dimension titles. Another 125 titles were mortgaged to stave off creditors in 2010, and those will remain encumbered after the sale.

Contreras-Sweet plans to retain the entire Weinstein Co. workforce, and even expand the L.A. and London offices. With the infusion of new cash, the company plans to announce release dates for several films that are all but completed, including “The Current War” starring Benedict Cumberbatch and Michael Shannon.

More Biz

  • European Union Competition Commissioner Margrethe VestagerSlush

    Liberty Global, Vodafone's $22 Billion Cable Deal Under Investigation by EU

    The European Commission has started an in-depth probe into Vodafone’s proposed acquisition of a raft of Liberty Global assets in Europe. The commission cited concerns that the deal could reduce competition in Germany and the Czech Republic. “It’s important that all EU consumers have access to affordable and good quality telephone and TV services,” Commissioner [...]

  • Kirk Kerkorian

    Kirk Kerkorian's Estate Settles With Widow for $12.5 Million

    The estate of late media mogul Kirk Kerkorian has a reached a settlement with his widow, who claimed she was entitled to a third of his $1.8 billion fortune. Una Davis will receive just $12.5 million under the deal, which is set for court approval on Wednesday. Davis married the mogul in March 2014, becoming [...]

  • Meg Whitman and Jeffrey Katzenberg Strictly

    Variety's Innovate Summit 2018: What We Learned

    New insights into how data collection plays a role in the tech and entertainment spheres were revealed at Variety’s annual Innovate summit held in Los Angeles on Wednesday. Meg Whitman and Jeffrey Katzenberg discussed the exciting future of television designed for mobile phone viewing with their new streaming platform, “Quibi,” an executive from “The Ellen Show” discussed the [...]

  • Capitol Music Group Names Amber Grimes

    Capitol Music Group Names Amber Grimes Senior VP of Global Creative

    Amber Grimes has been named to the newly-created position of Senior Vice President of Global Creative for Capitol Music Group, it was announced today by Chairman & CEO Steve Barnett, to whom Grimes will report. According to the announcement, in her new position, Grimes will be integrally involved in formulating and executing the company’s global [...]

  • Kevin Hart

    Why Kevin Hart's Mea Culpa Was Too Little, Too Late (Opinion)

    Forgive me if this sounds trite or preachy, but the importance of owning up to our mistakes cannot be overstated. Denials, silence, cover-ups, repudiation — all are unacceptable. Media outlets around the globe, including ours, wrote about how Kevin Hart initially took no responsibility for having posted disgusting homophobic tweets years ago that resurfaced when [...]

  • Annie Lennox, Chrissie Hynde, Industry Execs

    Annie Lennox, Chrissie Hynde, Industry Execs Sign Anti-Brexit Letter

    Annie Lennox, Chrissie Hynde, Pink Floyd’s Nick Mason, Paloma Faith, Ed Sheeran manager Stuart Camp and Grammy/Emmy award-winning film composer David Arnold and several leading UK music industry bodies are among the signees of a letter drafted by the new organization Music4EU, stating that Brexit “represents a significant threat to the UK’s music industry” and [...]

More From Our Brands

Access exclusive content