Last week we reported on the sale of Sumner Redstone’s investment in Midway.
Well for an update on the latest – Midway is in danger of defaulting on their bonds, over USD 100 million in debt. You can guess that is a lot of money that Midway does not have in their checking account right now, so this can be a bit of a problem. For it be a full blown problem, the bond holders must demand to be repaid and Midway needs to fall short in coming up with the cash. Sensational headlines will tell you Midway is defaulting and the sky has fallen on their heads, reality is this is a pretty common event in the capital markets and nothing to panic about yet.
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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.
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