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 Criadores de Mortal Combat com dificuldades financeiras 
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Midway's money troubles worsen, time running out to repay debt

The struggling publisher of Mortal Kombat vs. DC Universe is running out of options after a key investor leaves the company drowning in debt.
Midway's money troubles worsen, time running out to repay debt

Midway Games is running out of time. The much-loved, much-respected publisher of classic arcade games such as Mortal Kombat, Defender, Smash TV, and Spy Hunter may default on $240 million in debt according to the Chicago Tribune.

An integral part of the video game industry in the 80s and 90s, the arcade-focused Midway Games has struggled mightily to transition to a gaming world ruled by home consoles such as the Xbox, PlayStation, and Wii. Midway's latest game, Mortal Kombat vs. DC Universe, is seeing strong early sales. Unfortunately, that may not be enough to save the cash-strapped publishing legend.

Making matters worse is that Sumner Redstone, Midway's largest shareholder, just sold off his 87% stake in the company for a mere $100,000 (plus $70 million in debt) with no advance warning to Midway. And today, Midway warned that it might default on $240 million in debt, if bondholders request full repayment as is expected.

What would a post-Midway world look like? Can Mortal Kombat find a new home? Leave your thoughts in the comments below.
SEC filing says Mortal Kombat publisher has 50 days to pay off $150 million in debt; default could trigger subsequent $90 million repayment; company's assets total only $167.5 million.

After months of dreary earnings reports, Midway Games got a brief reprieve in November with the release of the decently reviewed Mortal Kombat vs. DC Universe. However, the honeymoon didn't last. This morning, the publically traded publisher issued a filing with the Securities and Exchange Commission that revealed it is carrying a whopping $240 million in debt. That's $72.5 million more than the $167.5 million in total assets--including property--that the company had as of September 30.

Midway's debt breaks down as follows: $150 million is from various note holders (with Wells Fargo as trustee), and another $90 million is from the publisher's former majority shareholder, National Amusements. National Amusements is headed by Sumner Redstone, the multimedia mogul who controls MTV parent Viacom and GameSpot parent CBS. Last week, gloomy stock-market conditions forced Redstone to sell his $30 million stake in the company for $100,000--and the assumption of $70 million of debt--to a private financier buyer, Mark Thomas.

As a result of the ownership change, Midway's debtors are able to call in the company's debts if they so choose. "Based on current market conditions, the registrant [Midway] expects that all holders of the [debt] notes will elect to require the registrant to repurchase their notes," it read. Indeed, Midway has apparently already received notices from investors eager to get their money back.

According to the terms of the $150 million loan, Midway has 20 days to send its debt holders notices of the controlling interest change. Said debt holders then have the option to demand the Chicago-based company repay their loans at 100 percent value--"plus accrued and unpaid interest"-- within 30 days. In short, that means that on January 23, 2009, Midway could default on debt worth nearly twice the $75.9 million quarterly loss that it reported in November. In the company's own words, "If this were to occur, the Registrant [Midway] does not believe, on the basis of its current liquidity, that it would have the ability to satisfy its obligation with respect to the repurchase of the [debt] Notes."

Even worse, defaulting on the $150 million debt would trigger a provision that would let National Amusements call in the $90 million that it loaned Midway. Again, in the filing's own words, "If these amounts were declared immediately due and payable, the Registrant [Midway] does not believe, on the basis of its current liquidity, that it would have the ability to satisfy its obligations to repay these amounts [to National Amusements]."

So what happens then? "I can't really comment other than to say we're pushing forward," a senior Midway corporate communications rep told GameSpot. The rep did confirm that for several weeks prior to today's announcement, Midway has been working with investment bank Lazard to come up with "liquidity solutions" that will be announced "as soon as possible." In the meantime, Midway is sticking to its 2009 release schedule, which has the long-delayed Vin Diesel-starring game the Wheelman launching in mid-February. It also revealed that a sequel to its TNA Impact wrestling game is slated for release later in the year.

Midway may default on $240 million in debt

By Wailin Wong | Tribune reporter
December 5, 2008

Video game-maker Midway Games is fighting for its survival after warning Thursday that it could default on $240 million in debt.

Chicago-based Midway disclosed in a regulatory filing that it has hired Lazard Ltd. to evaluate "strategic and financial alternatives." Midway spokesman Geoffrey Mogilner declined to elaborate on those options but said the company had sought Lazard's advisory services in advance of a looming debt payment in April.

Midway hired Lazard on Nov. 20, a week before Sumner Redstone sold his 87 percent stake in the video game-maker to private investor Mark Thomas for about $100,000 plus $70 million in debt.

Midway didn't know of Redstone's plans in advance and has communicated with Thomas through the investor's attorney, according to a person familiar with the situation.

According to the regulatory filing, the change in ownership triggers provisions in two series of Midway bonds that allow bondholders to ask for full repayment. Midway said it expects all of its bondholders to request this option. This would require Midway to pay out $150 million, an amount that the company said it would not be able to furnish based on its current liquidity.

Midway's default on the $150 million also would allow National Amusements, Redstone's holding company, to ask for the immediate repayment of a $90 million revolving credit line that it extended in February. Midway said it also would be unable to make that payment.

These events could take time to unfold, since Midway has 20 days to notify its bondholders. Those creditors then have 30 days to respond.

The $70 million in debt that Thomas assumed in the sale was part of this $90 million loan agreement. Mogilner said National Amusements still is administering the credit on Thomas' behalf.

Thomas' attorney declined to comment. No one at National Amusements was available for comment.

Mogilner said Midway plans to stay solvent and keep to its schedule of game releases. "At this point, our plans stretch out well into next year and beyond."

Thomas' attorney said this week that the investor has no plans to get involved in Midway's management.

07 Dez 2008
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