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Midway Games to make change-of-control offer for 6%, 7.125% convertibles, warns funds may fall short
By Jennifer Chiou
New York, Dec. 4 - Midway Games Inc. is required to make a change-of-control offer for its 6% convertible senior notes due 2025 and its 7.125% convertible senior notes, according to an 8-K filing with the Securities and Exchange Commission.
But it warned that it does not have the funds to repay all the debt.
The offer is to be made within 30 days as a result of a stock purchase agreement between sellers Sumner Redstone, National Amusements, Inc. and Sumco, Inc. along with purchaser Acquisition Holdings Subsidiary I LLC. On Nov. 28, Acquisition Holdings purchased all the Midway common shares held by the sellers, representing, collectively, 87.2% of Midway shares.
Also, on Dec. 1, Robert J. Steele resigned as a director of Midway.
In the offer, the company will pay par plus accrued interest.
Midway said it has received a notice from holders of each of the notes, adding that if all holders exercise their repurchase right, it would pay a purchase price of $150 million.
If this were to occur, Midway said it would not likely have the ability to satisfy that obligation and a failure to do so would be an event of default under the note indentures.
Under the purchase agreement, the purchaser paid a consideration of $100,000. MT Acquisition Holdings LLC is the sole member of the purchaser and its president is Mark Thomas.
Wells Fargo Bank, NA is the trustee.
On Nov. 20, a special committee of Midway's board retained Lazard to assist it in the evaluation of strategic and financial alternatives.
Midway Games, based in Chicago, is a developer and publisher of interactive entertainment software for videogame systems and personal computers.
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