Weinstein Company sale collapses again, sources say
Mark Von Holden/Getty Images for Dimension Films(NEW YORK) — The deal to purchase the scraps of Harvey Weinstein’s eponymous film studio collapsed again Tuesday after the buyers discovered undisclosed debt, two sources familiar with the transaction told ABC News.
The buyers of The Weinstein Company, an investor group led by Obama-era Small Business Administration chief Maria Contreras-Sweet, said they decided to scrap the purchase.
“All of us have worked in earnest on the transaction to purchase the assets of The Weinstein Company,” Contreras-Sweet said in a statement. “However, after signing and entering into the confirmatory diligence phase, we have received disappointing information about the viability of completing this transaction.”
The investors had agreed to pay $275 million in cash and assume $225 million in debt but discovered more than $60 million more debt than the studio had disclosed, the sources said, including $27 million in residuals and profit participation; $20 million in accounts payable and $17 million in a commercial arbitration award.
This is not the first time the deal turned sour.
New York Attorney General Eric Schneiderman had filed a lawsuit to force the parties to include compensation for victims of Harvey Weinstein’s sexual misconduct, a better human resources department and to make sure those responsible for misconduct at The Weinstein Company were not unjustly rewarded.
The parties had agreed to satisfy all of those conditions, including a victim’s compensation fund of $80 to $90 million.
“We’ll be disappointed if the parties cannot work out their differences and close the deal,” Schneiderman’s spokeswoman Amy Spitalnick said. “Our lawsuit against The Weinstein Company, Bob Weinstein and Harvey Weinstein remains active and our investigation is ongoing.”
Negotiations broke down a second time last month over the amount of cash the buyers were willing to put up before the sale closed to keep the studio running. At the time The Weinstein Company threatened to file for bankruptcy protection, an outcome that looks more likely now.
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