Relativity Media founder Ryan Kavanaugh says he has won back the bulk of his bankrupt studio in an auction for the company’s assets.
Kavanaugh on Sunday reached a deal with lenders to acquire everything except Relativity’s television business, the company said. The deal comes after court filings revealed the TV side, considered the most attractive asset, will go to a group of Relativity’s senior lenders.
The agreement marks a reversal of fortune for Kavanaugh, who led his mini-studio to bankruptcy court after a series of box-office flops and its failure to pay down a heavy debt burden.
The transaction, which requires court approval, will allow Relativity to emerge from bankruptcy with a “significantly fortified balance sheet,” the company said. As part of the deal, Kavanaugh will remain chairman and chief executive.
“My passion for Relativity is the same today as it was on the day I founded it,” Kavanaugh said in a statement. “I look forward to working with my partners and with Relativity’s executive team to build and take the company to the next level.”
Also with the film unit, Kavanaugh and his consortium of investors will acquire assets including Relativity Digital Studios, Relativity Music, plus the company’s minority stakes in the Relativity EuropaCorp Distribution joint venture and Relativity Sports.
The agreement will go before bankruptcy court judge Michael Wiles in New York during a Monday hearing. If approved, the company will emerge with $30 million (Dh110.2 million) in debt. The deal is expected to close on October 20, when the TV business will go into the hands of the senior lenders.
The company must also file a plan of reorganisation with the court.
Kavanaugh had long been expected to make a play for the company he founded in 2004, though there were many who doubted he could pull it off. His new investor group includes supermarket magnate Ron Burkle, who had previously put money into Relativity and holds a seat on its board of directors.
The lender group — composed of Anchorage Capital Group, Luxor Capital Group and Falcon Investment Advisors — has agreed to pay $125 million for the TV side. The group had previously offered a $250 million as a stalking horse bid for the entire company. Court filings revealed that the bankruptcy auction generated no competing bids for the whole enterprise.
Relativity’s TV arm, led by Tom Forman, is best known for reality shows suhc as Catfish and The Great Food Truck Race. It also has the new scripted programme, Limitless, on CBS, based on the 2011 Bradley Cooper movie of that name, which Relativity released.
Relativity’s movie studio has produced some hits like Immortals, but those were lately outnumbered by bombs such as Out of the Furnace.
