News World Undisclosed debt scuppers deal to buy Weinstein Co

Undisclosed debt scuppers deal to buy Weinstein Co

A group of investors pulled out of a deal to buy the beleaguered Weinstein Co. Photo: AAP
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A group of investors have pulled out of a deal to buy the beleaguered Weinstein Co 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.

But two people familiar with the proceedings said the buyers came across documents showing liabilities beyond the $US225 million ($A315 million) the buyers had been prepared to take on. One of the people said the documents showed $US64 million ($A90 million) in additional debt.

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.

Ms 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 Ms Contreras-Sweet and the Weinstein Co revived the deal following arduous negotiations with Mr 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”.

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 Mr 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.

Ms Contreras-Sweet, a former small business administrator in the Obama administration, said her group might also consider buying some assets out of bankruptcy.

Ms Contreras-Sweet, who had no prior experience in the entertainment industry, edged out other bidders for the company with a proposal that would have kept the company mostly intact and its roughly 150 workers employed.

She had pledged to transform the studio into a women-led venture with a female-majority board, of which she would be the chairwoman.