Weinstein Co. sale to Ron Burkle investor group collapses

A deal to sell the Weinstein Co. to an investor group led by billionaire Ron Burkle has collapsed, according to his partner, Maria Contreras-Sweet.

“We have received disappointing information about the viability of completing this transaction,” Contreras-Sweet said in a statement Tuesday. “As a result, we have decided to terminate this transaction.”

Burkle and Contreras-Sweet announced last Thursday that they had agreed to a $500 million transaction with the Weinstein Co. board. But since then, the investors have uncovered new information about previously undisclosed liabilities, according to a source familiar with the transaction.

Burkle and the board have also sparred over the issue of interim payments to keep the company afloat while the sale is pending. That issue had caused the negotiations to fall apart on Feb. 25, after Burkle’s team balked at the board’s demand for $7 million in upfront cash. At a marathon 12-hour negotiation with New York Attorney General Eric Schneiderman last Thursday, Burkle instead agreed to fund the company’s operations week by week.

An initial payment — thought to be about $1.5 million — was due today. But the two sides continued to haggle over the exact dollar amount. They also involved Schneiderman’s office in the dispute, sources tell Variety.

The deal was especially vulnerable to collapse because there is no breakup fee. In the early stages of the negotiations, the two sides had agreed to a $50 million breakup fee, which Burkle’s team would pay to the Weinstein Co. if the deal fell apart during the closing process. That would have provided a powerful incentive for the buyers to close.

But after Schneiderman’s office filed a discrimination lawsuit against the Weinstein Co. on Feb. 11, raising fresh allegations that the board had enabled Harvey Weinstein’s abuses, the terms changed. Burkle and his partner, Maria Contreras-Sweet, paused the negotiations, and when talks resumed, they said they were no longer willing to agree to a breakup fee.

It appears the Weinstein Co. now has little option except to declare bankruptcy.

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