The deal to purchase the scraps of Harvey Weinstein’s eponymous film studio collapsed again Tuesday after the buyers discovered undisclosed debt, two sources familiar with the transaction told ABC News.
The buyers of The Weinstein Company, an investor group led by Obama-era Small Business Administration chief Maria Contreras-Sweet, said they decided to scrap the purchase.
“All of us have worked in earnest on the transaction to purchase the assets of The Weinstein Company,” Contreras-Sweet said in a statement. “However, after signing and entering into the confirmatory diligence phase, we have received disappointing information about the viability of completing this transaction.”
The investors had agreed to pay $275 million in cash and assume $225 million in debt but discovered more than $60 million more debt than the studio had disclosed, the sources said, including $27 million in residuals and profit participation; $20 million in accounts payable and $17 million in a commercial arbitration award.
In a statement later on Tuesday, The Weinstein Company board of directors confirmed the deal was off.
"We are disappointed by the announcement today that the investor group led by Maria Contreras-Sweet and Ron Burkle has (again) walked away from its bid to buy the assets of The Weinstein Company," the statement reads. "Although we publicly predicted this outcome, the Board entered last week's agreement in the hope and good faith that a transaction would save this Company and its employees. The investors’ excuse that they learned new information about the Company’s financial condition is just that — an excuse.
"The Company has been transparent about its dire financial condition to the point of announcing its own LIKELY bankruptcy last week. We regret being correct that this buyer simply had no intention of following through on its promises. Nevertheless, this Board will not quit. We will continue to work tirelessly -- as we have for months -- to determine if there are any viable options outside of bankruptcy. In the meantime, we continue to pursue an orderly bankruptcy process to maximize the Company's value."
Weinstein Company sale is back on The Weinstein Company to pursue bankruptcy after sale negotiations break downThis is not the first time the deal turned sour.
New York Attorney General Eric Schneiderman had filed a lawsuit to force the parties to include compensation for victims of Harvey Weinstein's alleged sexual misconduct, a better human resources department and to make sure those responsible for misconduct at The Weinstein Company were not unjustly rewarded.
The parties had agreed to satisfy all of those conditions, including a victim's compensation fund of $80 to $90 million.
“We’ll be disappointed if the parties cannot work out their differences and close the deal," Schneiderman's spokeswoman Amy Spitalnick said. "Our lawsuit against The Weinstein Company, Bob Weinstein and Harvey Weinstein remains active and our investigation is ongoing.”
Negotiations broke down a second time last month over the amount of cash the buyers were willing to put up before the sale closed to keep the studio running. At the time The Weinstein Company threatened to file for bankruptcy protection, an outcome that looks more likely now.