Lantern Capital: Meet the Unlikely New Stewards of The Weinstein Co.

Lantern -Andy Mitchell and Milos Brajovich - H 2018
Courtesy of Lantern Entertainment

The Texas firm — which has won approval to buy Harvey Weinstein's former company for $310 million — is run by Andy Mitchell and Milos Brajovic, who are Hollywood novices.

Meet the buyer of Harvey Weinstein's once-storied film venture: Lantern Capital, a Dallas-based private equity firm best known for acquiring distressed businesses such as car dealerships, a zinc recycling plant and luxury resorts.

Earlier this week, a bankruptcy judge in Delaware approved Lantern's $310 million stalking horse bid to buy the assets of The Weinstein Co., putting control of the embattled company in the hands of Lantern Capital co-founders Andy Mitchell and Milos Brajovic, who are strangers to the entertainment business. Rather, in the parlance of the financial world, they are turnaround experts who target ailing companies with the goal of turning them into viable, ongoing concerns.

Mitchell, 42, and Brajovic, 45, face a daunting challenge in trying to rehabilitate and rebrand TWC. The deal to buy the company won't officially close for several more weeks, but Mitchell and Brajovic are already meeting with potential CEO candidates, insiders tell The Hollywood Reporter. (That person is expected to have industry experience.) They also are beginning to assess how best to release four films waiting in the wings. For the immediate future, the venture is expected to be called Lantern Entertainment. 

"Today, we reached another significant milestone," the duo wrote in an email to the remaining employees of TWC following Tuesday's court ruling. "As we continue to move forward with this process, we appreciate your continued support and patience. Looking ahead, our new company will represent an unwavering commitment to a culture of diverse professionals with the absolute highest level of ethics and standards. As we’ve maintained, our investment is in people. The best people will position us as the most progressive and forward-thinking presence in the industry. Lantern shares a deep appreciation for entertainment and all creative arts."

After winning numerous Oscars and dominating the indie film scene for years, TWC was irreparably damaged last fall when allegations of sexual misconduct and assault were levied against Weinstein, sparking the #MeToo movement. The larger-than-life film mogul founded the company in 2005 with his brother, Bob, after the siblings left Miramax.

It's not clear when Bob will officially depart to launch his own production venture. He has been running TWC since Harvey was fired from the company shortly after the initial round of allegations surfaced.

Hollywood history is replete with the injection of outside money; Lantern becomes the latest example.

For Mitchell and Brajovic, the road to buying TWC was full of its own drama and, at times, surreal. Initially, they were part of a $500 million bid to purchase the company pre-bankruptcy. That bid, led by former Obama administration official Maria Contreras-Sweet and Ron Burkle, fell apart at the 11th hour after numerous fits and starts. And, in yet another twist, Eric Schneiderman resigned as New York State Attorney General earlier this week in the wake of allegations that he himself assaulted several woman. Scheiderman had inserted himself into the TWC sale process process after filing a sweeping civil rights lawsuit against TWC and Harvey Weinstein.

In addition to the purchase price of $310 million — far less than the original $500 million bid — Lantern will assume more than $100 million in debt. In exchange, it will become the new home of TWC's library of 277 movies and television shows, including the Oscar-winning The King's Speech, Silver Linings Playbook and Project Runway. (Some titles in the library were used as collateral in a 2010 debt restructuring.)

Lantern Entertainment is expected to continue TWC's legacy of producing and acquiring movies. It is possible it may release its films through a third party, at least in the near future, since rekindling TWC's distribution operation could require substantial overhead. Also, Lantern will look for new office space in both Los Angeles and New York City.

The TWC movies awaiting release include The Current War, starring Benedict Cumberbatch as Thomas Edison, and The Upside, starring Kevin Hart, Bryan Cranston and Nicole Kidman (the movie is a remake of the French hit comedy The Intouchables). Both films debuted at the 2017 Toronto International Film Festival, but their release in theaters was put on hold once the scandal erupted. The biblical epic Mary Magdalene, starring Rooney Mara and Joaquin Phoenix, was also pulled from the schedule, although it still opened this spring in select international markets (TWC only has U.S. rights).

TWC also has U.S. rights to Hotel Mumbai, a thriller starring Armie Hammer and Dev Patel. The film, about the 2008 terrorist attacks in Mumbai, India, hopes to be an awards player. Lantern wants to hold on to the pic, although the producers have filed a lawsuit saying the movie shouldn't be be part of the asset transfer to Lantern.

Lantern Capital was founded in 2014 and, until pursuing the purchase of TWC, was focused on investing in distressed businesses having nothing to do with media or entertainment, including luxury resorts, a shipping company, auto dealerships and a recycler of zinc. Mitchell serves as CEO, while Brajovic is a partner.

In all, Lantern boasts about $2 billion in assets, and its goal is to turn companies around then exit them in three to five years, but insiders say TWC, its first foray into media, could mark a departure in that regard.

Also a departure is the size of the investment, given that Lantern typically invests $20 million to $150 million, though its goal is that those investments be concentrated on companies that can have enterprise values of up to $1 billion.

Prior to Lantern, Mitchell was with Ally Financial, and before that he was with Cerberus Capital Management, which has invested in companies like Chrysler, Avon Products, Albertsons grocery stores and Panavision, a deal that involved billionaire Ronald Perelman, who does have ties to Hollywood as an investor in New World Entertainment and Technicolor. More famously, Perelman used to own Marvel Entertainment Group, an acquisition that led to feuds with Stan Lee and Carl Icahn.

Brajovic was previously the founder of Noster Credit, a special situations investor. Before Noster, he was a senior portfolio manager and investment committee member at European Credit Management, a $15 billion fund focused on global fixed income and credit. 

In their note to TWC employees, the duo said, "It is our responsibility to protect the years of hard work and dedication contained within the Weinstein Company’s film and television libraries. We have a lot of work ahead of us to close this transaction while simultaneously rebuilding the organization. In the coming weeks, we look forward to working with you as we commence our new operations and put the new company on a path to long-term success and sustainability."