Sale deal for Weinstein Co called off

The board of The Weinstein Co, which is co-owned by Harvey Weinstein (above), announced its bankruptcy plans on Sunday.
The board of The Weinstein Co, which is co-owned by Harvey Weinstein (above), announced its bankruptcy plans on Sunday.PHOTO: REUTERS

LOS ANGELES • Two weeks ago, the embattled Weinstein Co looked like it had finally found a way forward.

An investor group had emerged with a plan to buy 90 per cent of the studio's assets, including rights to Project Runway and a 277-film library. The new company would be primarily led by women.

For The Weinstein Co, crippled in the wake of sexual misconduct allegations against co-owner Harvey Weinstein, the offer was the only way to keep the studio intact and its 150 employees working.

But The Weinstein Co's board - or at least the three men remaining on it - said on Sunday that the sale talks had fallen apart. Announcing its bankruptcy plans, the company's board said in a statement: "While we recognise that this is an extremely unfortunate outcome for our employees, our creditors and any victims, the board has no choice."

Since October, when the company began to implode after reports in The New York Times and The New Yorker revealed decades of sexual harassment allegations against Weinstein, very little has gone as expected.

At one point, two female-led investor groups were competing to buy the assets, with one intending to give profits to organisations focused on ending harassment, sexual abuse and discrimination.

So there is always the possibility of another twist.

The company has yet to file for bankruptcy - it said on Sunday that a filing would happen "over the coming days" - leaving open the possibility, however unlikely, that the two sides could come to an agreement.

Before the deal fell apart, the investor group had offered to pay about US$275 million (S$362.5 million) for The Weinstein Co, plus the assumption of US$225 million in debt.

Leading the effort was Ms Maria Contreras-Sweet, who ran the Small Business Administration under former United States president Barack Obama. Backers included Mr Ron Burkle, the billionaire investor, and Lantern Capital, a Texas private equity firm.

"It appears that this transaction has now ended," Ms Contreras-Sweet said in a statement on Monday, adding that The Weinstein Co's move had "surprised" her.

"While our efforts did not materialise as we had hoped, I am grateful for my investors who saw the compelling value of a women-led board."

The Weinstein Co declined to comment. It made public a sharply worded letter it sent to Ms Contreras-Sweet and Mr Burkle on Sunday that blamed her for failing to "keep your promises" about interim funding.

On Feb 11, New York's attorney general Eric T. Schneiderman, who is conducting an investigation into The Weinstein Co's internal dealings, filed a lawsuit against the studio and the Weinstein brothers alleging that they repeatedly violated state and city laws barring gender discrimination, sexual harassment and coercion.

And he held a news conference the next morning in which he publicly stated his requirements for a deal. In particular, he said, "there was no victim compensation fund".

By the end of that week, he had started to get what he wanted.

The Weinstein Co, for instance, fired its president, Mr David Glasser, on Feb 16.

Mr Glasser had been expected to run the new studio; the attorney general had pointed to him as one of the managers who perpetuated Weinstein's behaviour.

Ms Contreras-Sweet and Mr Burkle also met Mr Schneiderman and discussed plans for a full-fledged victim compensation fund, earmarking up to US$90 million.

But The Weinstein Co e-mailed a letter to the investor group on Sunday saying the deal was dead.

Bankruptcy would push the pause button on the many lawsuits, some of which predate the harassment revelations, that are pending against the company.

Suits can continue against Weinstein personally unless he makes his own bankruptcy filing.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on February 28, 2018, with the headline 'Sale deal for Weinstein Co called off'. Print Edition | Subscribe