A group of buyers including Fortress Investment Group is set to take over the bankrupt Vice Media company after bidding $350 million to acquire it out of bankruptcy, according to three people familiar with the matter.
Multiple bidders put in offers to acquire Vice Media, but only Fortress’s was deemed “qualified,” meaning the others did not meet the bar Vice had set for buyers, one of the people said. Deals for bankrupt companies require approval by a bankruptcy judge, who deems whether a plan to emerge is sustainable for the business.
The three people with knowledge of the deal spoke on the condition of anonymity because the process is confidential. A bankruptcy auction for the company originally scheduled for Thursday was called off.
Hozefa Lokhandwala and Bruce Dixon, Vice Media’s co-chief executives, told Vice employees in an email Thursday that they intended to forward Fortress’s bid to the bankruptcy court for approval.
“While we received multiple bids for the company, none of the other bids rose to the level of being deemed a superior bid,” they wrote.
Fortress initially bid $225 million, but increased the offer to $350 million in recent days.
Mr. Lokhandwala and Mr. Dixon said in their note that they expected the sale to close in July; the company would then begin operating under new ownership. Fortress has begun to receive buyer interest in some of Vice’s individual business units, according to a person familiar with the matter, and could consider selling some of the company to recoup its investment. In the past, bidders sought to acquire Vice Studios, the film and TV production business; Virtue, its ad agency; and i-D, one of the company’s magazines.
Vice, which had unsuccessfully sought to sell itself for years, filed for bankruptcy in May, with Fortress, as one of its lenders, in pole position to take over the company. It had since sought run a sale of the business in bankruptcy to see if it could kick up further interest.
As the sale process proceeds, Vice has some pressing issues to sort out. Many of its freelancers have complained that the company has not paid them, and some unionized employees have released a statement saying that the company should lay off fewer employees and that the offered severance package was too small. In the United States, Vice employees have started a GoFundMe page to support their laid-off co-workers, who they say have not been paid severance.
Despite the turbulence, the company has continued to notch some programming wins. In a note to employees this month, Mr. Lokhandwala and Mr. Dixon said “Bama Rush,” a documentary on Max, and “American Gladiators” on ESPN were among the top-performing titles on those platforms.
Shane Smith, the brash co-founder who became synonymous with Vice’s gonzo journalism and oversaw a culture that was rife with allegations of sexual harassment, is likely to remain at the company in some role, one of the people said. Mr. Lokhandwala and Mr. Dixon are likely to continue as co-chief executives.
The $225 million bid, which was led Fortress and Soros Fund Management, would be covered by their existing loans to the company. Taking ownership of Vice out of bankruptcy would allow Fortress to run the business without the weight of its heavy debt load and complex capital structure.
Source: New York Times
