Midway Games, the video game maker once one of media mogul Sumner Redstone's prized assets, has entered into an agreement to be purchased by Time Warner Inc.'s Warner Bros. Entertainment.
Midway was forced into bankruptcy earlier this year, in part because Redstone sold his 87% stake in the company for about $100,000. Redstone was under pressure to meet debt covenants for his National Amusements Inc., which holds most of his Viacom and CBS stock.
In a statement Thursday, Midway said it has entered into a "stalking horse' asset purchase agreement with Warner Bros. Entertainment and filed a sale and bid procedures motion with the bankruptcy court. That bid procedures motion will provide for notice to be given to third parties of the pending sale to Warner Bros. and offer the opportunity for interested parties to bid on the company's assets.
According to Midway, Warner Bros. would acquire all of its U.S. assets, including its Mortal Kombat video game franchise and its development studios in Seattle and Chicago for $33 million, subject to adjustment. The agreement does not include Midway's development studios in San Diego and Newcastle, U.K.
Redstone sold his stake in Midway in November to private investor Mark Thomas, a deal that allowed National Amusements to record a $700 million loss. National Amusements had been trying to renegotiate its loan agreements - Redstone was forced to sell about $233 million in Viacom and CBS stock in 2008 to meet loan covenants. Since them Redstone has vowed he would not sell any more Viacom or CBS stock. National amusements completed its debt restructuring earlier this month. h
Also in May, a group of Midway creditors sued Redstone over the Midway stock sale.
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