Midway Games Sold Cheap to Investor Mark Thomas

While most were most likely focusing on stuffing their stomachs with Thanksgiving deliciousness, or perhaps camping out for Black Friday deals, others were working hard to offload controlling shares of the company for next to nothing. This news comes immediately after the launch of their latest Mortal Kombat product, bringing to question if the sales of Mortal Kombat vs DC has failed to live up to expectations.

Ultimately, Midway Games was exchanged for mere chump change by media tycoon Sumner Redstone. Just in time for the start of the holiday season, Redstone sold off his controlling shares for a mere $100,000.00 USD to Mark Thomas of Acquisition Holdings Subsidiary, LLC. Considering that Midway Games has a history of well over twenty years behind it as a key player in the world of game development and publishing, the price is initially shocking to say the least. Once one digs a bit further however, it becomes clear that the acquisition package also comes with heaps of debt.

The total debt has been reported to be over $150 million in outstanding loans, on top of a $70 million loan which was granted by National Amusements.

Beyond debt, with a stock value at well under a dollar per share, Midway facing delisting by the NYSE. To make matters worse, previous quarterly and annual statements have revealed that net income has been in the red, even despite a more solid product lineup in 2007 and 2008. It is entirely possible that Thomas is simply hoping to cash in on the value of the number of IPs which Midway has in its portfolio, instead of coming on to help the company get back on its feet. Among the more recognizable intellectual properties are Mortal Kombat, NFL Blitz, NBA Jam, Smash TV, Rampage, San Fransisco Rush, Galaga, Spy Hunter, and Joust.

The swap involved a trade of over 80.3 million shares at $0.0012 per share, far less than the value of each share at prices seen in recent weeks. The transaction is being handled by the New York based Kramer Levin Naftalis & Frankel law firm, although thus far they have released very few details of the transaction itself beyond statements on Thomas’ expected role in the company. All that we know thus far is that Mark Thomas is intending to be as hands off as possible in management and executive affairs once company control has officially switched hands.

Time will tell if Thomas has any tricks up his sleeve to help reform and revive Midway, however the details on his desire to remain hands-off leaves us with more concern than hope. With EA Chicago already out for the count, Midway Games remains as one of the few remaining Chicago based developers, and publishers of games. With over 800 employees relying on Midway Games to keep food on the table, we are really wishing for the best.

We will of course keep you up to date as we watch the future of Midway unfold, so stay tuned.