Redstone Dumps Midway Shares
Media Mogul Takes $800 Million Hit
By Mike Farrell -- Multichannel News, 12/2/2008 6:29:00 AM
Viacom and CBS chairman Sumner Redstone sold his stake in video game maker Midway Games at a huge loss, a loss that could significantly ease the pressure on the mogul and his other media holding—National Amusements—to sell its Viacom and CBS holdings.
According to documents filed with the Securities and Exchange Commission Dec. 1, Redstone, National Amusements and Sumco Inc., sold a total of 80.3 million Midway shares for $0.0012 each, or less than $100,000 for the whole block, to Acquisition Holdings Subsidiary, a vehicle headed by private investor Mark Thomas, on Nov. 28. The shares represent about 87% of total Midway stock outstanding.
The deal appears to be a huge personal blow to Redstone, who has spent hundreds of millions of dollars accumulating Midway stock over the years and watched his investment deteriorate as Midway’s fortunes waned.
It is estimated that Redstone paid more than $800 million for the stake over the years—based on Midway’s closing price of 38 cents each on Nov. 28, that stake was worth about $30.5 million. While Redstone sold his stock at a substantial discount to even that price, the losses he and NAI will be able to take advantage of may give it some leverage in continued negotiations with NAI’s banks.
That could ease any pressure on Redstone or NAI to sell its holdings in Viacom or CBS. In October, NAI was forced to sell about $233 million worth of Viacom and CBS stock to satisfy NAI’s loan covenants. Redstone has vowed that he would not sell any additional shares of either company and hinted previously that NAI has other assets—namely movie theaters and the land under them—that could be sold to satisfy future capital needs.
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