Redstone Sells Stake In Video Game Maker
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Tuesday, December 2, 2008
Sumner Redstone, the owner of CBS and Viacom, sold his 87 percent stake in video-game maker Midway Games for $100,000 to help restructure debts that threaten his family business.
As part of the deal, private investor Mark Thomas acquired from Redstone's National Amusements holding company the right to collect on $70 million in debt owed by Midway, according to a regulatory filing today.
Tax benefits will probably help Redstone refinance the National Amusements debt coming due this month and avoid selling more shares of Viacom and CBS, said Creditsights analyst Jake Newman. Redstone, 85, sold $233 million in non-voting shares of CBS and Viacom in October to meet debt covenants and swore off further stock sales.
The biggest challenge was negotiating something that both sides could live with, Newman said in reference to talks between Redstone and his bankers. The banks also have an incentive to work with Redstone because he controls two large organizations that have a lot of banking needs.
Midway closed on Friday at 38 cents a share, valuing Redstone's stake at $30.5 million. Thomas will pay 0.12 cent a share for the stock, according to today's regulatory filing. Midway fell 5 cents to 33 cents yesterday in New York Stock Exchange composite trading.
Redstone's daughter, Shari Redstone, resigned as Midway's chairman, the company said last month, citing her role in National Amusements talks with banks. Because of her former position at Midway, Redstone, 54, wasn't involved in the company's sale, her spokeswoman, Nancy Sterling, said in an e-mail.
NYSE said on Friday that it may delist Midway because the Chicago-based maker of Mortal Kombat hasn't maintained an average market value of at least $75 million over 30 days. Midway shares have declined 88 percent this year and the company has lost money every quarter for the past four years.
Redstone built National Amusements, a New England movie-theater operator, into one of the biggest U.S. media companies. At age 63, he mounted a takeover battle for Viacom, the cable and broadcast television programmer.
At the end of 2005, Redstone split CBS and Viacom, setting up the broadcaster to pay a dividend and designing the cable company for faster growth.
