To help alleviate some of his debt, Sumner Redstone has sold his money-losing stake in video game manufacturer Midway. He has yet to reach a deal with his lenders to renegotiate that $1.6 billion, but this should help towards that end.
WSJ: Mr. Redstone’s holding company, National Amusements Inc., is expected to announce Monday that it sold its 87% stake in Midway to investor Mark Thomas, a move that represents a significant loss on the media mogul’s investment but secures a hefty tax benefit as he negotiates other asset sales.
National Amusements is in negotiations with its banks to restructure its $1.6 billion debt pile after breaching one of its debt covenants. As part of the restructuring, the Redstone family has been discussing selling some of its assets, including some movie theatres and a holding in slot-machine company WMS Industries.
The sale of the Midway stake, agreed upon Friday, wasn’t conducted as part of a deal with the banks but is likely to ease the pressure on the Redstone family and potentially contribute to a final deal.
A spokesperson for National Amusements said the holding company determined it would be financially beneficial to sell the Midway stake in 2008. Mr. Thomas has agreed to pay about $100,000, or $0.0012 a share, for the Midway stake and will assume $70 million of senior secured and unsecured debt, National Amusements is expected to detail in a 13D filing with the Securities and Exchange Commission on Monday. Mr. Thomas has no prior relationship with Midway Games.
With the sale, National Amusements is expected to realise a 2008 tax loss of more than $800 million, according to a person familiar with the situation. National Amusements could use a portion of the loss against income earned this year, as well as a tax refund of amounts paid in prior years, the person said.