Embattled publisher Midway Games has admitted that it is in danger of defaulting on $240 million in debt, and has hired investment adviser Lazard Ltd. to evaluate "strategic and financial alternatives."
Midway's troubles have steadily mounted in recent months. Majority shareholder Sumner Redstone just sold his 87 percent stake
in the company to private investor Mark Thomas for just $100,000 and the assumption of $70 million in debt. Redstone's move followed a series of layoffs across the company's studios and, still more recently, a delisting warning
from the New York Stock Exchange.
As reported by the Chicago Tribune
, a Securities and Exchange Commission filing indicates that the change in ownership now allows bondholders to request that Midway repurchase any and all bonds in full.
Midway expects all of its bondowners to request a buyout, which will cost the company $150 million that it does not have. If Midway fails to repurchase the bonds, it compounds a $90 million loan agreement with Redstone’s National Amusements company and increases total debt to $240 million.
A report in Hollywood trade paper Variety goes further in suggesting that Midway can now survive for only 50 days
, unless it can come up with the $150 million figure. The report claims that the company has only $10.3 million in cash reserves and that bankruptcy is now a real possibility.