The Wall Street Journal reported today that in an effort to control his National Amusements Inc debts, Sumner Redstone has sold his shares of Midway Games to a private investor, Mark Thomas, who has no previous relationship with Midway Games.
A spokesperson for National Amusements said the holding company determined it would be financially beneficial to sell the Midway stake in 2008. Mr. Thomas has agreed to pay about $100,000, or $0.0012 a share, for the Midway stake and will assume $70 million of senior secured and unsecured debt
Just to give you an idea of what kind of value you are looking at here, Dec 1 closing price of Midway Games (NYSE: MWY) was 0.33, with a market cap of 30.4mm. Redstone offloaded Midway and all the debt behind it, a smart move on his part.
WSJ says it nicely again with:
The sale of the Midway stake marks the end of a tumultuous investment for Mr. Redstone. He poured hundreds of millions of dollars into the company, only to see his investment fizzle as the company failed to create new hit games and its stock collapsed. Mr. Redstone’s stake had a market value of just $30 million Friday, but he sold it for a huge discount to even that — a condition of finding a buyer quickly and completing a deal this year.
So what does this mean for Midway?
Well its more turbulence for an already well shaken company. Midway has recently posted losses, laid off staff, had a Board member resign, and are under threat of being de-listed from the New York Stock Exchange. Not really happy times on the corporate front. A low share price and market cap in an industry that a few people are trolling around for takeovers.
Midway needs a win. MK vs DC seems to be doing alright in it’s first few weeks out, but no where near the massive success Midway needs. The best news to hit the wire has been the top secret game Midway is working on is getting a lot of hype. That hype is coming from inside Midway which could mean one of two things: 1. Shameless self promotion as a defense mechanism, or 2. Actual talent allowed to show itself.
The new investor with a majority stake in Midway is rumored to be a passive investor with no interest in a seat on the board or dealing directly with management. This could be the best news of all if Midway moves from being an over-managed wanna-be blockbuster factory to the creative powerhouse that they used to be pumping out the likes of Cruisin’ USA, Killer Instinct, Area 51, Gauntlent, and NBA Jam.
Where do you think Midway is headed?
