Redstone sells Midway Games stake at a huge loss
LOS ANGELES _ Billionaire media mogul Sumner Redstone and his holding companies have sold his family's 80.3 million shares in Midway Games Inc. for less than a penny each, according to a Monday securities filing.
The sale means a loss of hundreds of millions of dollars, which Redstone is expected to use to offset taxable gains his holding company, National Amusements Inc., is realizing from selling assets in its attempts to restructure $1.6 billion in debt.
An $800 million portion of the debt is due Dec. 19.
According to the filing with the Securities and Exchange Commission, Redstone and companies National Amusements and Sumco Inc. on Friday sold their entire 87.2 percent stake for $0.0012 per share, about $100,000 in total, to Mark Thomas.
Midway, best known for its "Mortal Kombat" video game, had 92.1 million shares outstanding as of Oct. 31.
Thomas takes on $70 million in debt on the books of Chicago-based Midway, according to the filing.
Wedbush Morgan analyst Michael Pachter estimated Redstone lost around $600 million on his investment in the video game publisher.
"It's big enough to feel the pain," Pachter said.
Thomas is unknown in the video game business, he added.
Last month Redstone's daughter, Shari E. Redstone, resigned from Midway's board to focus on her responsibilities with National Amusements. The move came after Sumner Redstone was forced to sell $233 million of his family's nonvoting stake in CBS Corp. and Viacom Inc. to raise enough capital to stay in compliance with the terms of a loan at National Amusements. National Amusements said then that a drop in value of CBS and Viacom shares had put its debt obligations at risk.
The capital loss on selling Midway and the disposal of Midway's debt will help National Amusements as it works with lenders on its debt restructuring. The company owes $1.6 billion to a syndicate of lenders led by Bank of America, including the $800 million that matures Dec. 19.
Sumner Redstone is executive chairman of both CBS and Viacom and controls the majority of voting shares in both.
National Amusements had already been in talks to sell some or all of its movie theaters and its interest in slot machine supplier WMS Industries Inc., as well as its interest in Midway.
National Amusements declined to comment immediately, and Midway did not immediately respond to a request for comment.
Midway shares fell 5 cents, or 13.2 percent, to 33 cents Monday. They have traded between $4.48 and 17 cents the past 52 weeks.
Viacom shares fell $1.69, or 9.6 percent, to $15.89, while CBS shares lost 83 cents, or 12.5 percent, to $5.83.