Weinstein group dumped by buyer over high liabilities

Deal fell apart after buyer learned Weinstein’s liabilities were higher than $225 million previously thought

FILE - In this Jan. 6, 2016, file photo, producer Harvey Weinstein participates in a panel at the A&E 2016 Winter TCA in Pasadena, Calif. A group of investors pulled out of a deal to buy the beleaguered Weinstein Co. on Tuesday, March 6, 2018, after discovering tens of millions of dollars in undisclosed debt, according to people familiar with the negotiations. (Photo by Richard Shotwell/Invision/AP, File)

Maria Contreras-Sweet said her group is pulling out of its deal to buy the troubled Weinstein Company film and TV studio after an examination of its finances raised doubts about the company’s viability.

The deal fell apart after Ms Contreras-Sweet’s group learned Weinstein’s liabilities were higher than the $225 million previously thought, people with knowledge of the matter said. Ms Contreras-Sweet said in a statement Tuesday she would consider acquiring Weinstein assets if they become available in a bankruptcy.

The decision leaves the beleaguered film and TV producer with few options other than seeking protection from creditors in court. Various financiers and content partners have distanced themselves from projects with the studio since sexual misconduct allegations drove co-founder and Oscar-winning producer Harvey Weinstein from his job in October.

“We are disappointed by the announcement today that the investor group led by Maria Contreras-Sweet and Ron Burkle has (again) walked away from its bid to buy the assets of the Weinstein Company,” the board said in a statement. “The investors’ excuse that they learned new information about the company’s financial condition is just that – an excuse.”

The company said it would continue to seek alternatives to bankruptcy.

Ms Contreras-Sweet, the former head of the Small Business Administration under former president Barack Obama, first made an offer for the studio in November, after Weinstein left. Her group included billionaires Burkle and Len Blavatnik.

The parties reached what appeared to be a definitive accord last week after discussions with New York state attorney general Eric Schneiderman, who had sued the company, alleging management was complicit in Harvey Weinstein’s alleged abuses.

But on Tuesday the buyers said they had received “disappointing information about the viability” of the deal. That included obligations to pay $27m in residuals, accounts payable of $20m and $17m from an arbitration award, according to one of the people, who asked not to be named because the details are private.

“I remain committed to working to advance women’s business ownership in all sectors and to inspire girls to envision their futures as leaders of important companies,” Ms Contreras-Sweet said in the statement, adding that she would also be looking at other opportunities in the entertainment industry.

It’s possible that Ms Contreras-Sweet will face competition for the assets, as potential suitors including Lions Gate Entertainment and Weinstein’s old company Miramax had expressed an interest.