Weintraub Entertainment Hires Milken to Help Bail Out Firm

Financially troubled Weintraub Entertainment Group may get a bailout with some help from former Drexel Burnham Lambert Inc. junk bond king Michael Milken, an attorney for the movie and TV producer confirmed Tuesday.

But even with efforts to find new money under way, the entertainment company missed a July 30 interest payment on its $80 million in bonds. Holders of the subordinated debentures will be entitled to declare the company in default if the approximately $5-million interest payment isn’t made within 30 days of the due date.

Gerald Parsky--an attorney for Weintraub Entertainment’s chairman and principal owner, Jerry Weintraub--said the company has “money in the bank” to cover the missed payment but withheld it pending a “major” financial transaction. Parsky declined to give details of the transaction but said Weintraub would remain in control of the company.

Parsky acknowledged that Weintraub had hired Milken to assist the investment firm of Bear, Stearns & Co. in efforts to find new capital for the company, which has been plagued by an uninterrupted string of movie flops since it was founded last year. “Both are acting as our investment bankers,” the attorney said in a telephone interview Tuesday. Parsky is also a Weintraub Entertainment director.

Milken in June launched a Los Angeles-based consulting firm called International Capital Access Group after resigning as head of Drexel’s high-yield bond department in Beverly Hills.

The resignation came after federal authorities entered a 98-count criminal indictment against Milken based on his activities at Drexel. He has denied the charges.

Milken has said International Capital will specialize in advising employee groups, minorities and unions in their attempts to raise capital. A spokeswoman for Milken declined to discuss his involvement with Weintraub Entertainment.

While at Drexel, the junk bond specialist initially planned to raise funds for the entertainment company’s 1987 launch. But Drexel backed away from the deal, and rival Bear Stearns eventually handled the sale of bonds to about three dozen investors, including a number of its own employees.

Drexel is barred by its settlement of a Securities and Exchange Commission suit from dealing with Milken. Weintraub is a longtime friend of Milken, Parsky said.

Friend of President

According to filings with the SEC last year, CenTrust Savings Bank, with $15 million in notes, was the largest buyer of the debentures. David Paul, chairman of the ailing Florida-based savings bank, is also a Weintraub Entertainment director. Parsky said CenTrust still holds the notes but declined to estimate their current value.

A longtime movie producer (“Diner,” “Karate Kid”) and manager of performers such as John Denver and the Pointer Sisters, Jerry Weintraub has been a close friend and political supporter of President Bush.

Even as Weintraub’s company ran into financial embarrassment in the last year, Bush remained close to his friend and went so far as to initiate a highly publicized premiere for Weintraub’s “My Stepmother Is an Alien” last Christmas.

As that film, “Troop Beverly Hills,” “Listen to Me” and others flopped, the film executive discussed a possible capital infusion from New York investor Stephen Swid, who recently acquired a stake in Cinecom, another independent film company. But some individuals familiar with those talks say they faltered over the issue of control--Weintraub controls 76.6% voting power in the closely held company--and may have fallen apart altogether.

Weintraub might conceivably raise new capital by selling his company’s 3,000-title library of movies and TV programs, which it purchased in 1987 from Cannon Group for about $90 million in cash and stock. An executive close to Weintraub said a library sale would probably yield considerably more than the purchase price and might help the producer retire bank debt.

According to a 10K statement filed with the SEC earlier this year, Weintraub Entertainment owed about $60 million to Bank of America and Credit Lyonnais, a European bank, at the end of 1988. Last year, the production company posted a $40.9-million loss on $48.4 million in revenue.

As part of the bailout effort, Weintraub has also discussed entering a multiple film distribution deal with Warner Bros., according to individuals familiar with the talks. A Warner spokesman declined to comment.

Weintraub currently has a long-term deal to distribute movies through Columbia Pictures but might receive larger “up-front” payments under a Warner arrangement. Such payments might allow the company to mount a new slate of films, possibly including its previously announced film version of the stage musical “Evita.”

Parsky acknowledged that Guy McElwaine, chairman of Weintraub Entertainment’s motion picture division, was in discussions about a possible job with the talent agency International Creative Management. But Parsky said he didn’t know if McElwaine, a former agent, would join ICM.