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Ryan Kavanaugh Defends Relativity Against ‘Malicious Witch-Hunt,’ Accuses Colbeck Capital of ‘Buyout Scheme’

CEO claims Colbeck is working with former Fox executive Tony Vinciquerra ”in hopes of usurping new Relativity investors“

Relativity Media CEO Ryan Kavanaugh boldly defended his company on Thursday after weeks of speculation that his independent studio was on the verge of financial calamity. In a lengthy defense, Kavanaugh accused his investors Colbeck Capital and former Fox executive Tony Vinciquerra of attempting a “buyout scheme” and of spreading “false, defamatory rumors in hopes of usurping new Relativity investors.”

In the statement, Kavanaugh addressed questions over the company’s debt and equity structure that have seen him racing against the clock to ensure longterm survival. He said that Toronto-based Catalyst capital purchased the company’s senior debt and “over $130 million was wired to the company” in that deal. In addition, he said “Catalyst committed to providing an incremental $170 million of working capital.”

Since then, it appears that the studio’s longterm lender, Anchorage Capital, bought out Catalyst. Said Kavanaugh: “The lenders have been working closely with Relativity to provide the company with further capital to keep the company stable and growing.”

Meanwhlie the mogul accused Colbeck and Vinciquerra of attempting to seize control of the company.

“We have been aware that false rumors are coming from a group led by Colbeck Capital and Tony Vinciquerra who are working to execute a buyout scheme,” said Kavanaugh in the statement. “Tony came to Relativity for one meeting under the guise of being a consultant to a well-known hedge fund before we learned that his scheme was to raise money to purchase Relativity.”

“Tony has continued to meet with as many funds as possible to raise capital while spreading false, defamatory rumors in hopes of usurping new Relativity investors. Tony’s seat on the board of STX Entertainment is also a conflict of interest,” he added.

Colbeck and STX declined to comment on the matter. Representatives for Vinciquerra did not immediately return TheWrap’s request for comment.

An individual with knowledge of Vinciquerra’s thinking said he was not planning a takeover. “There’s no takeover attempt going on,” this person said. The individual said that the equity structure of the company is very complicated and hard to manage, which has dissuaded many investors. “A lot of people have tried to take runs at Relativity until they get in there, and then they start backing towards the door,” he said.

Similarly Colbeck has no takeover plans, according to one individual close to the talks, but “are only trying to help lenders resolve the crisis.”

Kavanaugh has been furiously seeking to raise money to pay off debt that has resulted from previous near-death experiences for the studio. On Wednesday Kavanaugh and one of his holding companies were hit with a lawsuit over a multimillion-dollar defaulted vendor payment, according to documents in New York State Supreme Court.

Kavanaugh said the lawsuit, filed by P&A lender RKA Film Financing, was “frivolous.”

Questions have also arisen over Relativity’s ability to release its movies during the financial mess, pushing Sundance darling “The Bronze” from a July release to October. Citing an abundance of R-rated summer comedies (like “Ted 2” and “Entourage” which admittedly performed below expectation), Relativity also pushed Kristen Wiig’s “Masterminds” twice landing in October, in addition to Kate Bosworth’s “Before I Wake” on Sept. 25.

Read Kavanaugh’s complete statement from Thursday:

“We’ve remained silent during the past few weeks as false, speculative, stories have run about Relativity. At this point, we’re clarifying the situation to protect the company from this malicious witch-hunt.

Relativity has been working closely with our lenders, which include our long-term lender Anchorage Capital. Our lenders have been very cooperative and have been working closely with us to ensure that Relativity continues to move forward, grow and execute our business plan. Catalyst Capital fully funded a purchase of Relativity’s entire senior debt and over $130 million was wired to the company. In addition, Catalyst committed to providing an incremental $170 million of working capital. Relativity’s current lenders, including Anchorage, decided that it was in the company’s best interest for them and others to own all of the senior debt versus having one group own such a large stake. Therefore, they exercised their contractual right to buy out Catalyst. The lenders have been working closely with Relativity to provide the company with further capital to keep the company stable and growing.

We have been aware that false rumors are coming from a group led by Colbeck Capital and Tony Vinciquerra who are working to execute a buyout scheme. Tony came to Relativity for one meeting under the guise of being a consultant to a well-known hedge fund before we learned that his scheme was to raise money to purchase Relativity. Tony has continued to meet with as many funds as possible to raise capital while spreading false, defamatory rumors in hopes of usurping new Relativity investors. Tony’s seat on the board of STX Entertainment is also a conflict of interest.

There is no concern by our lenders about the company’s P&A spending, and in fact, our lenders are providing Relativity with further working capital to ensure growth. Neither our lenders, nor Relativity are in any way concerned with RKA’s recent attempt to extract $10 million dollars of my personal capital under the guise of litigation, and we will not be surprised by their continued efforts to file baseless litigation. This will not dissuade the company or our lenders.

We thank our lenders for their continued, unwavering support.”