The Wrap reported yesterday afternoon that an agreement has been reached for Disney to sell Miramax to LA billionaire Ronald Tutor and his partners Morgan Creek, Colony Capital and David Bergstein. The sale price was said to be $675 million.
"The deal is not done, but it's going to get done," a person with knowledge of the deal told The Wrap. "We've agreed in principle." Following is a round-up of what folks are saying a deal would look like and what obstacles remain.
Speaking to Deadline, an insider said it's "95% just about done. A couple of deal terms and timing issues remain. Like when does the deal actually close? When do all of the contingencies Disney needs to deliver get cleared? Right now there's not really a Miramax because it's been comingled with other Disney assets. So what has to happen is those assets have to go in and out so that the partnership can end up buying Miramax with clean assets and no liabilities. By tomorrow we could have a deal in principle. But it'll be up to Disney to decide when to sign it and announce it."
As to the price being paid, a source told Deadline: "The headline will be $675 million but it's really north of $675 million."
Tutor, according to TW, will take the lead management position while the embattled Bergstein is expected to take a prominent advisory role. A Deadline source, however, said of Bergstein: "He gets paid for packaging the deal and consulting on the transaction. Then that's it." The Los Angeles Times seconds that, saying Bergstein will not work for the new Miramax.
Morgan Creek would be a distribution partner for the new Miramax, but is also putting capital into the deal, says TW. (Deadline says Morgan is contributing equity of $50 million with James Robinson looking for a seat on the board, although "there have not been any discussions" about linking Morgan Creek's product or employees to Miramax.)
Colony Capital’s Richard Nanula, who heads the fund's entertainment division, is a former CFO of Disney. The private equity firm is run by founder and CEO Thomas Barrack Jr. Two other equity partners are involved in the purchase, but have chosen to remain anonymous, says TW. The Hollywood Reporter includes Gulf Capital, an investment firm based in Abu Dhabi, as one of the investors.
In addition to distributing the library, the new Miramax is expected to produce several new movies annually. For the first year, Walt Disney Studios will distribute its movies until a new distribution operation has been formed, reports the LAT.
The deal is expected to officially close by the end of July.
News of the agreement brought out some skeptics: A rival bidder told TW that Tutor would have two weeks to find banks to provide about $200 million in debt financing and get the deal closed, but that this would not happen at $675 million. "They can't close this deal at $675 million," said the skeptic.
Indeed, notes Variety, there have been many times over the past few months that Disney was about to sign a deal to hand the keys back to Bob and Harvey Weinstein. Sources this week signaled to the trade that the Weinsteins remain contenders for the company with an offer backed by billionaire Ron Burkle.
"A sharp drop in the number of active lenders, the current conservative environment and a significant drop in library values generally could combine to make closing a deal of any significant size challenging," Clark Hallren, managing partner of Clear Scope Partners, an entertainment advisory that also raises senior debt capital told THR.
But David Davis, managing partner of entertainment advisory Arpeggio Partners, said raising bank debt of the level sought appears feasible. "Colony has strong backing behind it and having the former Disney executive is a plus," Davis told THR. "There are a lot of people involved who can raise $300 million-plus."
Meanwhile, THR adds that despite reports Rob Lowe is not involved in the Tutor consortium, though his name was recently linked to Colony.