When private equity investor Mark Thomas purchased controlling interest in Midway Games from Sumner Redstone's National Amusements last November, he also acquired the game publisher's debts to its parent company. Now that Midway has gone bankrupt, Thomas wants to ensure he's among the first creditors in line for repayment if the publisher is liquidated.
As initially spotted by GamePolitics, Thomas (through his Acquisition Holdings Subsidiary company) filed a pre-hearing statement with the bankruptcy court late last month. In arguing for adequate protection on AHS's secured debt, the company also offered a number of insights into the publisher's precarious position. The AHS filing stated that at the rate Midway is burning cash, its reserves will be depleted by late June. Making matters worse, the publisher has no new major releases planned to arrive by then, so there's no expected influx of cash on the way.
Furthermore, AHS says that Midway has overstated the value of its assets, such that the total value of the company is not worth more than the amount of AHS's secured debt, some $30 million.
"While Midway did obtain a 2008 appraisal which purports to show substantial value for Midway's assets, an examination of that appraisal shows that it was based on unrealistic and unreasonable assumptions," AHS claims. "In any event, bids actually received by Midway for its assets show that that the appraisal is unreliable."
The filing indicates that Midway has received acquisition bids from a number of companies, with the highest bidder topping out at $30 million. The names of all bidders in the process were redacted from the transcript obtained by GameSpot.
Another point of note in the filing is that Thomas originally offered $1 million for Redstone's shares of Midway on November 20. However, after deciding that the risks involved with the company were higher than he'd originally considered, he revised the offer to $100,000 on November 24. The deal was eventually finalized on November 26.