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Redstone sold Midway Games; will WMS stock follow?

Dec 2, 2008 5:07 PM

Industry Insider by Ray Poirier | Sumner Redstone’s money troubles forced the billionaire media tycoon to sell off his majority interest in Midway Games, the video game publisher on Monday, leaving insiders at WMS Industries Inc. (WMS) wondering if that slots manufacturer would be next.

Redstone is the single largest stockholder in WMS, a position he took in the early 1990’s with the approval of the Nevada gaming regulators.

Pressures have been mounting on Redstone whose family’s holding company, National Amusements Inc., has accumulated $1.6 billion of debt. The company’s better known holdings include media giants Viacom and CBS Corp.

Redstone’s 87.2% ownership of Midway Games, best known for its "Mortal Kombat" video game, was taken over by private investor Mark Thomas. His Acquisition Holdings Subsidiary LLC purchased about 80.3 million shares of Midway at $0.0012 per share. Thomas also agreed to assume $70 million of senior secured and unsecured debt.

Sources said the Midway Games sale was the latest move by National Amusements to try to shore up its finances. Last month, Redstone’s daughter Shari resigned from the Midway board.

National Amusements said at the time that a drop in value of both Viacom and CBS placed its debt obligations at risk.

The concern over Redstone’s WMS shares being sold may have contributed to investors’ lack of confidence on Monday. The shares fell $2.72 to a closing price of $21.93.