Weinstein deal scuttled

Photo: The Canadian Press

A group of investors pulled out of a deal to buy the beleaguered Weinstein Co. on Tuesday after discovering tens of millions of dollars in undisclosed debt, according to people familiar with the negotiations.

Businesswoman Maria Contreras-Sweet, who has been leading the group of buyers along with billionaire investor Ron Burkle, said in a statement that "disappointing information about the viability of completing this transaction" had led her to call off the sale.

She didn't offer further details. But two people familiar with the proceedings said the buyers came across documents showing liabilities beyond the $225 million the buyers had been prepared to take on. One of the people said the documents showed $64 million in additional debt. Both people spoke on condition of anonymity because they weren't authorized to discuss private negotiations publicly.

The Weinstein Co. has been trying to stave off bankruptcy since sexual assault and harassment allegations emerged last fall against its co-founder, the Hollywood mogul Harvey Weinstein. Contreras-Sweet's buyout offer had presented the best hope for avoiding that fate. But the deal was plunged into turmoil after New York State Attorney General Eric Schneiderman filed a lawsuit against the studio last month.

The announcement came just days after Contreras-Sweet and the Weinstein Co. revived the deal following arduous negotiations with Schneiderman. It marks the second time in two weeks that the sale has been called off. The first time, it was the Weinstein Co. that pulled out, announcing it would file for bankruptcy protection because the buyers had failed to live up to commitments. Talks to revive the deal resumed soon afterward.

It was unclear if there is any chance of reviving the sale. One of the people close to the talks said, "the deal is dead."

Representatives from the Weinstein Co. did not immediately return requests for comment. But it appears the collapse of the sale puts the studio back on track toward filing for bankruptcy protection, which would halt lawsuits filed against the company by Weinstein's accusers.

Bankruptcy proceedings could also renew the interest of several major entertainment companies who had offered to buy assets of the company, including Lionsgate Entertainment and Miramax, the studio formerly led by Harvey Weinstein and his brother Bob. Contreras-Sweet, a former small business administrator in the Obama administration, said her group might also consider buying some assets out of bankruptcy.