LOS ANGELES (NYTimes) - A potential buyer walked away from the Weinstein Co. on Tuesday (Nov 7), nudging the struggling studio closer to the brink.
After disagreeing on price, Colony Capital, the private equity firm run by Thomas J. Barrack Jr., ended talks with the boutique studio to buy some or all of its assets, according to two people briefed on the negotiations, who spoke on the condition of anonymity because the process was private.
The Weinstein Co. entered into exclusive talks with Colony on Oct 16 as it rushed to contain the fallout from allegations of sexual harassment and assault against its co-founder Harvey Weinstein.
"We believe the company has substantial value and growth potential," Barrack said in a statement at the time.
But Colony found more disorder than it had expected - and less value - once it started closely examining the studio. By Oct 26, a preliminary agreement for Colony to give the Weinstein Co. an immediate cash infusion had fallen apart, even as Colony continued to evaluate the possible purchase of some or all of the studio.
By Tuesday, the acquisition effort had also broken down, in part because of Colony's desire to structure any purchase in a way that would not enrich Weinstein, according to the people briefed on the matter. Weinstein, who has denied any allegations of nonconsensual sex, was fired by the Weinstein Co. on Oct 8 but retains a roughly 20 percent ownership stake in the studio.
A spokesman for the Weinstein Co. did not respond to requests for comment.
While many television and film partners have cut ties with the Weinstein Co., the studio still has several movies planned for release and a handful of television shows in production, including Project Runway. But the studio, which has about 150 employees, needs a financial lifeline to keep operating.
Executives at the Weinstein Co. have been talking to Fortress Investment Group, a private equity firm, about a potential financing package for the studio valued at roughly US$35 million, which would provide enough liquidity for the studio to operate roughly through January. A Fortress spokesman did not respond to a request for comment.
Also on Tuesday, Debtwire, a subscription-only news service for debt-market traders, reported that Weinstein Co. lenders had hired the law firm Sidley Austin to advise on a possible bankruptcy filing.
The talks between Colony Capital and the Weinstein Co. broke down a day after The New Yorker reported that Weinstein had employed private detectives to dig up dirt on journalists and his accusers in an effort to quash articles then in the works on his alleged misconduct.