A not entirely unexpected eleventh-hour move by Ryan Kavanaugh to snag part of his own Chapter 11 company Relativity Media is far from a done deal, sources say. In fact, it might be going nowhere. “Nothing’s sealed — they are still talking,” one individual close to the Relativity situation said today. Another source says that the Stalking Horse Bidders are willing to entertain selling the CEO the company assets for a high price but have yet to see any proof from Kavanaugh that he has the money in the bank.
Another source put it as bluntly as possible: “Ryan Kavanaugh is full of sh*t,” said the individual close to senior lenders. “The Stalking Horse guys are getting the entire thing.”
Having made their $250 million offer for Relativity yesterday before the court-ordered deadline, the senior lenders (aka Stalking Horse Bidders) the embattled CEO is talking to now are “worried that this is hot air, all for show so Kavanaugh can save face,” a source says. The attempt by Kavanaugh and unnamed backers is to purchase most of the company except the lucrative TV division.”There are many contingencies that need to be met,” another individual with knowledge of the talks says. “Ryan Kavanaugh has to prove that he has the capital not only for the high price of the asset but also to be able to maintain it going forward.” That is probably going to be difficult for Kavanaugh to do since the TV division has been the only one pumping real money into the company and the film assets are the albatross.
Also, any agreement that splits the company likely would require the consent of U.S. Bankruptcy Court Judge Michael Wiles. The federal judge would probably want proof that Kavanaugh actually could run the company financially. In other words, there is a long way for Kavanaugh to go on this, and the CEO will not be getting any preferential treatment.
Things are so fluid right now that Relativity board members were in the dark about a possible deal as talks were going on in New York last night. “Ryan is in New York right now, and it’s playing in real time,” a source told Deadline. ”Those of us in L.A. have been kept in the dark. We know he is trying mightily, but we have no confirmation ourselves that this has happened.”
The results of the auction are scheduled to be made public early next week with a sale scheduled to close October 20. Relativity had no comment on the movement of the past 24 hours.