The Weinstein Co. announced Sunday that it will declare bankruptcy after a $500 million deal to sell the company collapsed.
The deal-breaker appears to have been the bid group’s refusal to put up cash imminently to keep the company afloat. The board of the company released a letter Sunday evening to investors Ron Burkle and Maria Contreras-Sweet — who led the bid group — breaking off negotiations. According to the letter, the company made clear that it was in dire need of operating cash, but the bidders made on Saturday night did not provide for adequate interim financing.
“Based on the events of the past week, however, we must conclude that your plan to buy this company was illusory and would only leave this Company hobbling toward its demise to the detriment of all constituents,” the letter stated. “Despite your previous statements, it is simply impossible to avoid the conclusion that you have no intention to sign an agreement – much less to close one – and no desire to save valuable assets and jobs.”
The sale was close to being announced exactly two weeks ago, when New York Attorney General Eric Schneiderman stepped in and filed a suit accusing the company of enabling Harvey Weinstein’s sexual abuses. The lawsuit scrambled the deal, creating the possibility of an outside monitor or other intrusive provisions. Schneiderman also objected to the investors’ plan to hire David Glasser, the COO under Weinstein, as CEO.
Schneiderman met on Wednesday with Contreras-Sweet, Burkle, and representatives of the Weinstein Co. board. After the meeting, it appeared that a deal could be reached that would meet with Schneiderman’s approval.
However, it appears that the added stress on the transaction exposed conflicts between the two sides. According to the Weinstein Co. letter, the two sides continued to have conflicts over Glasser’s role, a week after the board fired him.
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