It’s starting to look like the bankruptcy of Midway Games (MWY) will be a windfall for its titular owner, the mysterious Mark Thomas.
A quick review of what drove Midway under (or at least with such rapid speed): In December Sumner Redstone sold his 87% stake in Midway to Thomas, a man with no prior experience in the gaming business. The price: a paltry $100,000, plus a boatload of debt.
At the time, we didn’t understand what Thomas would want in the company, even at such a low price: The change in ownership triggered debt covenants allowing creditors to seek immediate repayment. The debt provisions gave Midway until Feb 19 to live — the company folded a week early and declared Chapter 11 on Feb 12.
So is Mark Thomas a fool? Hardly. Thomas’ holding company obtained $30 million in “secured debt” from Sumner along with the 87% equity stake. Which means as creditors scrabble over what’s left of Midway, Thomas gets dibs on the first $30 million in assets that can be salvaged from the company. Midway’s other creditors are howling.
And we’re not just talking used PCs and office furniture: Midway still has the IP rights to “Mortal Kombat,” which just saw something of a hit in “DC Universe vs” last holidays.
So just how much is Mortal Kombat worth? Whatever it’s eventually sold for, Thomas gets the first $30 million. Not bad for a $100,000 investment and two months work.