Midway Files for Bankruptcy Protection
Posted: Fri Feb 13, 2009 7:48 pm
Midway Files for Bankruptcy Protection
By Kris Graft
Chicago-based Mortal Kombat house Midway Games said Thursday that it has filed for Chapter 11 bankruptcy protection, as the company anticipates it will not be able to satisfy accelerated note repurchase obligations.
In November last year, a change in control of the company triggered a provision that gave two groups of noteholders the option to ask that their bonds be paid in full. Midway had negotiated with both parties to extend their right to demand payback until this month.
Combined, the noteholders could demand back $150 million; Midway had previously noted that it wouldn't likely be able to meet the obligation.
The change in control occured when Midway stakeholder Sumner Redstone sold his 87.2 percent stake in the company last year to private investor Mark Thomas.
"This was a difficult but necessary decision," said Midway CEO Matt Booty in a statement. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives.
"This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure."
Midway said it plans to operate as usual under Chapter 11 protection. The company added that it is seeking approval from the U.S. Bankruptcy Court for the District of Delaware for "a variety of First Day Motions" that will allow the company to operate as normally as possible. Midway expects the motions to be approved.
Booty said that Midway is still fundamentally solid. "Overall, Mortal Kombat vs. DC Universe sales are approaching 2 million units shipped, TNA iMPACT! has shipped approximately one million units, and our Game Party franchise has sold close to three 3 million units in total."
By Kris Graft
Chicago-based Mortal Kombat house Midway Games said Thursday that it has filed for Chapter 11 bankruptcy protection, as the company anticipates it will not be able to satisfy accelerated note repurchase obligations.
In November last year, a change in control of the company triggered a provision that gave two groups of noteholders the option to ask that their bonds be paid in full. Midway had negotiated with both parties to extend their right to demand payback until this month.
Combined, the noteholders could demand back $150 million; Midway had previously noted that it wouldn't likely be able to meet the obligation.
The change in control occured when Midway stakeholder Sumner Redstone sold his 87.2 percent stake in the company last year to private investor Mark Thomas.
"This was a difficult but necessary decision," said Midway CEO Matt Booty in a statement. "We have been focused on realigning our operations and improving our execution, and this filing will relieve the immediate pressure from our creditors and provide us time for an orderly exploration of our strategic alternatives.
"This Chapter 11 filing is the next logical step in an ongoing process to address our capital structure."
Midway said it plans to operate as usual under Chapter 11 protection. The company added that it is seeking approval from the U.S. Bankruptcy Court for the District of Delaware for "a variety of First Day Motions" that will allow the company to operate as normally as possible. Midway expects the motions to be approved.
Booty said that Midway is still fundamentally solid. "Overall, Mortal Kombat vs. DC Universe sales are approaching 2 million units shipped, TNA iMPACT! has shipped approximately one million units, and our Game Party franchise has sold close to three 3 million units in total."
