Weinsteins confirm Miramax deal still on
Caution that negotiations will take more timeThe Weinsteins and their key backers in the $625 million bid for Miramax say negotiations with Disney continue despite media reports to the contrary. But serious obstacles have arisen to the brothers' regaining control of the company they founded.
The problem is not between Disney and the Weinstein group backed by Ron Burkle's Yucaipa Cos.; it's between Burkle, the Weinstein brothers and the Weinstein Co. board and investors.
Burkle is ready to put up the $300 million in equity he has pledged, but he insists on owning 100% of Miramax, sources said. He will not share equity ownership with Harvey and Bob Weinstein; he sees their role as managers of the assets.
That's not because Burkle won't share the upside. It's because giving the brothers, or the Weinstein Co., any share of ownership could open a legal Pandora's box. If the Weinstein Co. ever collapses, investors or even vendors could go after the Miramax assets if there is any shared equity.
So, as a source knowledgeable about Burkle's position puts it, the negotiations now are between the brothers and the Weinstein Co. board. Only after the Weinsteins work out an agreement with the board and investors who have put up the hundreds of millions to keep Burkle's Miramax investment separate can the negotiations with Disney resume.
In a statement Friday, the Weinsteins said a potential deal remains alive. "The Weinstein brothers, the Weinstein Co. and Ron Burkle are all working toward a deal to purchase and operate Miramax. The parties continue to work diligently toward an agreement," the statement said.
Aside from Burkle's equity, the rest of the money is supposed to be "mezzanine level" financing put together by New York hedge fund Fortress-Colbeck. Part of that is to be backed by receivables -- money contracted for but not yet paid for licensing Miramax movies.
It has been the Weinstein brothers' dream to regain control of the company they founded in 1979 and sold to Disney in 1993. They left Miramax in 2005 and soon after formed the Weinstein Co.
One reason the Weinsteins have an edge in doing a deal with Disney is that they still retain certain rights, including remake rights, to titles in the library. So, if someone else bought Miramax, they would still have to deal with the Weinsteins on some level.
The Weinsteins and Burkle have been in an exclusive negotiating period since April, after Disney chose their bid over one put forward by brothers Alec and Tom Gores and another by a group of offshore investors advised by David Bergstein.
"We're in no rush to push a deal together," the Burkle source said. "Everybody is working to get it done. We continue to be optimistic."