Stalking Horse Bidder Lantern Capital Has Competition In Race To Ride Off With Weinstein Company Assets

March 20, 2018

EXCLUSIVE: Now that the clock has begun ticking on The Weinstein Company’s 363 bankruptcy filed tonight in Delaware, does Lantern Capital have a clear path to take over the assets of the company?

Informed sources said the answer is not necessarily. Lantern starts this race in pole position as the “stalking horse,” but the bidding is just getting underway and there are numerous other parties that covet the TWC assets in different configurations. The bankruptcy judge’s job is to get the most money possible for secured and then unsecured creditors. But if Lantern wins. it will meet with the approval of the remaining TWC board. Lantern is in the early lead because it has vetted the assets thoroughly as part of the earlier bid that recently cratered, and therefore committed to a floor bid around $450 million. Now, others will have an opportunity over the next 45 days or so to sweeten the pot after they perform due diligence to scrutinize what they are getting. Those bidders are expected to include Miramax (beIN), Lionsgate, Vince Investments and Critical Content. I am told that there will be other bidders for the assets of the company.

Before it is over, Lantern will have an opportunity to up its bid and so it is quite possible that the $500 million commitment made by Ron Burkle’s Yucaipa, Maria Conteras-Sweet and Lantern could be reached by the time this is over in 45-60 days.

If Lantern is the victor, that would please the remaining board of directors led by Tarak Ben Ammar, Lance Maerov and Bob Weinstein, who have hung in to guide the company to its next incarnation after the entity was devastated by the allegations of sexual impropriety leveled against Harvey Weinstein. Lantern isn’t looking to strip off library and TV and movie development titles, as some of the proposed bids might. The Dallas-based concern wants to use the pieces of TWC to launch a new company that will likely keep many of the current employees – about 98 are left – who have weathered the storm since last October when reports first surfaced about Weinstein’s alleged misdeeds.

“We have made it a priority that Harvey Weinstein not destroy this company through his personal actions,” Ammar told Deadline. “We fired him October 8 and it is now six months later and many didn’t believe then that we could survive this long. We first wanted to make sure the employees were paid and their jobs protected and that’s what we did for six months. We didn’t fire anybody. We paid for development and to keep the projects moving. Project Runway is being cast as we speak and we have worked hard to make the IP appealing to potential buyers. They saw we were doing this, and what films, TV shows and scripts were here and that we continued even though we lost Mr. Weinstein. Preserving the assets, the employees and the relationship with talent has been a priority. We have wanted agents to believe their projects were not being destroyed in a burning house and today, the assets of the company will be going to a well-capitalized group who’ll not only buy those assets but will create an ongoing business that will start with the hiring of top executives. What attracted the bidder was not only the IP but also the people who remain.

“There are several important things about tonight’s actions,” Ammar said. “One is that we have kept one of the original investors, who didn’t run away, and that means that the assets are good ones. Yucaipa had every right to change its mind, but the people with them stayed and instead of putting up one-third, they have tripled their investment, and they intend to invest more to keep this an ongoing business.”

Ammar said that was just one of the developments that mattered most here. Another is that guild residuals will not be jeopardized if the Lantern deal goes through.

Other worthy elements included lifting the cloak of non-disclosure agreements for the sake of transparency of past misdeeds, and the commitment to make sure that victims of Weinstein were not left high and dry by the bankruptcy plunge.

“We’ve released employees who signed NDAs with the company, so they are free to speak,” he said. “Lantern had a head start and for three months they’ve done their homework, they know this is a difficult business and our job was to make sure what we sold to them will be a successful ongoing business into the future. Lantern has a track record of going out and getting the best people to run their businesses. Aside from the employees, we wanted to send a message to the community that their project will not be ignored or destroyed. There is Project Runway, Yellowstone, Guantanamo, and all of the unreleased movies like the Kevin Hart film The Upside taken care of. We believe we have chosen somebody who’ll protect the IP the way we would have done had the company continued.”

One reason that the Yucaipa deal might have cratered was the possibility that a victim or a disgruntled party could have sued the new owners. That cannot happen after the company is washed through bankruptcy, from which a new company will emerge free and clear of those entanglements.

There have been concerns that a bankruptcy would leave vulnerable women and former employees who claimed they were abused by Weinstein. The Yucaipa bid seemed to have created a rich fund that would have contained around $90 million or so — $50M+ in insurance and the rest from the winning bidder — but I am now told by sources that number was overinflated. In the new configuration that will be part of the bankruptcy, the actual insurance policy amount that can handle class action settlements will be $30 million, and it will be worked out in bankruptcy court just how much Lantern or another bidder will add to that mix. I’m told that the actual extra commitment being discussed with Yucaipa was another $10 million, plus the possibility of some profits from the five completed but unreleased TWC films, once Yucaipa recouped its costs.

For his part, Ammar said: “A buyer will not be responsible for what happened in the old company when they are buying its assets. But we believe they will want to send a message to corporate America and help victims with some sort of assistance.”

Ammar said he believes that if Lantern closes the deal, the town will be better for it.

“Sometimes, Hollywood is after stupid money, but this is smart money with smart people behind it,” Ammar said. “The board will accompany them until they own the company and work with them to meet the agents, stakeholders, and the top people in town. We will welcome a new player in Hollywood in a world where content is now more highly valued than ever by Apple, Amazon, Netflix and so many other companies.”

Category: celebrity gossip

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