In a surprise twist in the continuing saga of The Weinstein Co., an investor group said Thursday that it had reached an agreement to buy most of the assets of the near-bankrupt studio, just days after a deal had been declared all but dead.
“This next step represents the best possible pathway to support victims and protect employees,” Maria Contreras-Sweet, who leads the investor group, said in a statement.
In keeping with the whipsawing sale process, however, it did not become clear that a deal had in fact been completed until The Weinstein Co.'s board released a statement several hours later. “We consider this to be a positive outcome under what have been incredibly difficult circumstances,” the statement said.
The board also thanked Eric T. Schneiderman, New York’s attorney general, who hosted a meeting between the two sides at his offices Thursday.
Contreras-Sweet, who declined an interview request, is best known for running the Small Business Administration under President Barack Obama. According to a person briefed on the deal, an agreement will call for her group to pay off The Weinstein Co.'s debt, which totals roughly $225 million. In return, the group will receive the majority of the studio’s assets, which include “Project Runway” and a 277-film library.
Those assets will be used to start a new entertainment firm, which The Weinstein Co.'s 150 employees, or at least most of them, will be invited to join. The new company will be “led by a board of directors made up of a majority of independent women,” Contreras-Sweet said in her statement. The group will invest an additional $275 million in the new studio to fund operations.
The Weinstein Co. has been struggling to remain afloat since October, when The New York Times and The New Yorker magazine disclosed decades of sexual harassment allegations against the company’s co-owner, Harvey Weinstein. Weinstein has denied ever engaging in “nonconsensual sex.”
The deal includes a victims’ fund worth up to $90 million, and Weinstein and his brother, Bob Weinstein, who jointly own about 42 percent of The Weinstein Co., will receive no cash from the sale. Other equity holders will also be wiped out.
In a statement, Schneiderman said, “As part of these negotiations, we are pleased to have received express commitments from the parties that the new company will create a real, well-funded victims’ compensation fund, implement HR policies that will protect all employees and will not unjustly reward bad actors.”
He added, “We will work with the parties in the weeks ahead to ensure that the parties honor and memorialize these commitments.”
The Weinstein Co. had said Sunday that it would file for bankruptcy after the collapse of talks with Contreras-Sweet’s group, which includes the billionaire investor Ron Burkle. The Weinstein Co.'s board said at the time that promised interim funding from the group had not materialized, leaving bankruptcy as the only option.
But on Thursday, Schneiderman got the sale back on track by holding a meeting in his offices with Burkle and Contreras-Sweet and members of The Weinstein Co.'s board, including Bob Weinstein and Lance Maerov, an executive at the advertising giant WPP Group. Burkle, who has a long history with The Weinstein Co., stepping in to help Harvey Weinstein finance films like “Our Idiot Brother” in 2011, asked for the meeting.
Schneiderman sued the company and the Weinstein brothers on Feb. 11, alleging that they violated state and city laws barring gender discrimination, sexual harassment and coercion. A deal for the company had been expected to be formalized on Feb. 12, but the lawsuit brought sale talks to a halt.
Amy Spitalnick, the press secretary for Schneiderman, said Feb. 11 that his office had recently reached out to representatives of Contreras-Sweet to emphasize the importance of adequately compensating victims, protecting employees and not rewarding those who enabled or perpetuated Weinstein’s misconduct.
“We were surprised to learn they were not serious about discussing any of those issues or even sharing the most basic information about how they planned to address them,” Spitalnick said. Schneiderman said again in a Feb. 12 news conference “there was no victim compensation fund.”
Contreras-Sweet was stunned by Schneiderman’s public remarks, according to one person briefed on the matter, believing that he was overlooking money for victims that had been built into her proposal.
By the end of that week, Schneiderman had started to get what he wanted. The Weinstein Co., for instance, fired its president, David Glasser, on Feb. 16. Glasser had been expected to run the new studio; Schneiderman had pointed to him as being one of the managers who perpetuated Weinstein’s behavior.
Contreras-Sweet also met with Schneiderman and laid out her plans for a victims’ compensation fund. In the end, the settlement fund was increased; up to $90 million will be made available, including an estimated $30 million in insurance money. Schneiderman’s lawsuit remains active, however.
Contreras-Sweet outlined her plans for the company in a letter to its board in November, when she first made her offer.
“I will be chairwoman of a majority-female board of directors,” she wrote in the letter. “Women will be significant investors in the new company and control its voting stock.”
After failing to find other buyers who would keep the studio intact — Lionsgate, Shamrock Capital Advisors, Killer Content and the Qatari company beIN Media Group were among those considering various pieces — the board entered into exclusive negotiations with Contreras-Sweet’s group in late January.
Contreras-Sweet has no experience in Hollywood, but she is known in Los Angeles business and political circles. Much of her business career was spent at a California 7UP bottler, where she became vice president of public affairs and a part owner, according to her website. She then ran the California Business, Transportation and Housing Agency, managing a $14 million budget. After that, she co-founded a private equity firm and, in late 2006, founded ProAmerica Bank, which focused on Latino small business owners. The bank struggled and was sold in 2015.
“We are grateful to the New York state attorney general’s office for their efforts in helping us reach an agreement, and we are grateful to our investors who have believed in this process and in the compelling value of a female-led company,” her statement on Thursday said. “We also want to thank all the parties who returned to the negotiating table to help us reach this development.”
This article originally appeared in The New York Times.