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Posted on  Jul 18,2009  08:07

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Midway Games sale yields nearly $5 million for investor

A Massachusetts businessman who paid a mere $100,000 for an 87% stake in Midway Games Inc. scored nearly $5 million from its sale, chalking up a 4,900% return on his eight-month investment.

Mark E. Thomas, an investor in Concord, Mass., bought his shares in the troubled Chicago game publisher in November from financially strapped media magnate Sumner Redstone, who got rid of his holdings in time to claim a $700-million 2008 tax write-off.

Thomas, who had no experience in running a video-game company, received about $5 million from the sale of Midway’s assets to Warner Bros., according to documents filed Thursday with the Securities and Exchange Commission.

At the same time, Midway, which is under Chapter 11 bankruptcy protection, laid off 235 of its 520 employees, or 45% of its staff, according to the filing. Dismissed were 100 developers in San Diego, 60 workers in the Chicago headquarters and 75 developers in Britain. About 210 Midway developers in Chicago and Seattle stayed on as Warner Bros. employees.

The filing also disclosed the final price Warner paid for most of Midway’s assets, including its marquee Mortal Kombat franchise: $49 million. The original figure announced in June, when Warner emerged as the sole bidder for Midway, was $33 million.

The extra $16 million comes from Warner’s agreement to compensate Midway for the final value of Midway’s games inventory and accounts receivable July 9, the day before the deal closed, said Midway spokesman Geoff Mogilner.

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