December 2, 2008 / 6:47 AM / 10 years ago

Sumner Redstone sells stake in Midway Games

NEW YORK (Reuters) - Sumner Redstone sold his stake in video game company Midway Games Inc, as pressure mounts on the media mogul to bolster the finances of his main investment vehicle, National Amusements Inc.

Viacom CEO Summer Redstone arrives at the premiere of 'Sky Captain and the World of Tomorrow' in Hollywood, September 14, 2004. REUTERS/Lucy Nicholson

Redstone; National Amusements, which owns controlling stakes in Viacom and CBS as well as a movie theater chain; and another related company, Sumco Inc, collectively sold a stake of around 87.2 percent they held in Midway Games.

The move, disclosed in a filing with the U.S. Securities and Exchange Commission on Monday comes as National Amusements faces a deadline to repay some $800 million in debt by the end of the year. It has a total of about $1.6 billion in debt outstanding.

The filing showed that Redstone and the companies sold Midway shares for 0.12 cent per share on November 28. While it was not immediately clear how much he lost from the investment, Midway shares have fallen around 99 percent from their 2005 peak of $23.65.

Midway shares fell 9 cents, or 23.68 percent, to 29 cents by midmorning on Monday.

National Amuseuments had already sold about $230 million of shares of CBS Corp and Viacom Inc to help meet debt payments, and has been in talks with banks in hopes of avoiding a debt crunch.

The Wall Street Journal earlier reported that the Midway stake was sold to little-known investor Mark Thomas. The report said the sale amounts to a significant loss on Redstone’s investment, but secures a hefty tax benefit as he negotiates other asset sales.

Sumner’s troubles have also involved a public spat with his daughter, Shari Redstone, once an heir apparent to his conglomerate. The two had a public dispute over corporate governance.

Shari Redstone resigned as chairwoman of Midway in November, but is now working on refinancing efforts for National Amusements.

Midway publishes popular titles such as “Unreal Tournament” and “Mortal Kombat” but remains a small player in an industry dominated by larger rivals like Electronic Arts Inc and console makers such as Nintendo Co and Microsoft Corp.

“If he provides additional working capital, Midway will be in an improved position to compete,” said Wedbush Morgan Securities analyst Michael Pachter.

Reporting by Ritsuko Ando and Franklin Paul in New York and Sakthi Prasad in Bangalore; Editing by Maureen Bavdek and Derek Caney

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