Weinsteins' Miramax funding still intact
Duo wait in wings on slim chance Tutor/Colony deal crumblesThere is a tiny spark of life left in Harvey and Bob Weinstein's dream of reclaiming Miramax Films, the movie brand they named after their mother and father, but the light is flickering.
For the Weinsteins to succeed requires two things that appear unlikely at this moment: The current leading bidders, Colony Capital and Ronald Tutor, must falter; and Disney must take a lower price, which it hasn't been willing to do in months of talks so far.
Disney has made it clear it values Miramax at $700 million. The winning Tutor/Colony offer was $675 million, according to sources. The Weinsteins' last offer with investor Ron Burkle, which Disney declined, was $565 million. Other investors were spurned who offered about $550 million.
It seemed the brothers' final spark might have been extinguished Friday when the New York Post reported that Fortress Investments, another financial backer, was "out of the picture."
The lead on the Post story said, "There will be no second chances for the Weinsteins."
The Post, citing "a source with direct knowledge" of the Miramax negotiations, predicted that the Colony group would announce the closing of their Miramax deal Wednesday.
If that happens, the money would come from equity investments by Tutor, whose day job is CEO of Tutor-Perini construction, and Colony Capital, led by chairman and founder Tom Barrack, whose online bio credits him with overseeing placement of $45 billion in assets for his investors.
The deal was brought to Tutor by David Bergstein, CEO of Pangea Media Group, who has taken a backseat in the final stages of talks since Tutor brought in Colony as a partner. Instead, former Disney CFO Richard Nanula, now a partner at Colony, led the negotiations with Disney.
This investment might mean Tutor will take a more active role in movies. Over the past half-dozen years, Tutor has been a silent partner to Bergstein in Capitol, ThinkFilm and other deals; but in an interview two weeks ago, Tutor said he will be more involved and that Bergstein (who remains an adviser on the sale) won't have an operational role in the new movie studio planned to exploit and rebuild Miramax.
Aside from running a global construction giant, Tutor also has a date Friday to be deposed (over his strenuous legal objections) in the involuntary bankruptcy action brought March 17 in federal court in Los Angeles by creditors against five companies controlled by Bergstein, at least one of which, R2D2, Tutor co-owned with Bergstein until January 2009. Bergstein also was ordered last Tuesday to be deposed Aug. 3 by federal Judge Barry Russell.
Tutor and Bergstein did not respond to a request for comment made through their attorney.
Tutor/Colony minority investors include Jim Robinson, CEO of Morgan Creek Prods., which apparently is in line to handle foreign sales for the proposed studio; and Gulf Capital, an investment firm in Abu Dhabi, which has been involved since Bergstein put the deal together for Tutor in April.
Tutor had said that actor Rob Lowe would not be part of the buying group, but the "Brothers and Sisters" star said in an interview last week that he is involved.
"We are right now in very heavy negotiating with Disney, and we're governed by all these nondisclosures, so really all I can say is that it's real, it's on, it's happening," Lowe told Zap2it. "I think it's going to close, and it's going to be really, really exciting."
There are estimated to be $150 million-$250 million in receivables over the next five years that go with the library, which will help reduce the buyers' cost.
Tutor's nondisclosure agreement with Disney expires Wednesday, which is when due diligence on the deal is supposed to be done, barring an extension.
If, however, the partners don't line up all the financing or, if after gazing at the books they lower their offer and Disney balks again, then the deal still could fall apart.
If it does, the Weinsteins and Burkle are ready to re-open talks, and Fortress will be part of it. Although Burkle is expected to provide the equity investment, Fortress and a related hedge fund would handle the debt portion of the buy, which would probably be more than $200 million.
In a statement late Friday, Fortress said: "The New York Post's report that Bob and Harvey Weinstein and Ron Burkle have lost the financial backing of Fortress Investment Group is patently false. Fortress remains committed to providing financial support for the Weinsteins' and Mr. Burkle's bid for Miramax. Our relationship with the Weinsteins and Mr. Burkle, also contrary to yesterday's report, remains strong and constructive, and the group has ample financial backing to successfully pursue an acquisition of Miramax. We look forward to continuing to work closely with our partners in support of their efforts."
The Weinsteins' ace in the hole was supposed to be their 2007 exit agreement with Disney, which sources at the Weinstein Co. continue to insist requires the brothers' approval before anyone else can remake a dozen of Miramax's key franchise movies including "Halloween" and "Scary Movie."
Tutor said in an interview two weeks ago that their group doesn't believe it needs the Weinsteins' approval for the sale of the assets or to remake those movies.
If Tutor/Colony does close, the Weinsteins are likely to assert those claims, keeping the sparks flying.