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Court Filing Says Midway's Money To Deplete By July

A court statement has estimated Midway's cash will be depleted by July of this year -- and the Gamasutra-analyzed document contains details on the company's mysterious investor Mark Thomas.
In a pre-hearing statement filed March 30, 2009, new Midway owner Acquisition Holdings Subsidiary disclosed a number of details about the troubled publisher, including an estimation that the company's cash will be depleted by July of this year if it continues losing money at its current rate. Also included in the Gamasutra-analyzed document, unearthed by GamePolitics, is a description of Mark Thomas, the man behind Acquisition Holdings who negotiated the purchase of Midway for a mere $100,000. Thomas has also been the subject of considerable speculation as well as concerns that Thomas stood to profit at the expense of Midway's creditors. The State of Midway According to a company budget cited in the filing, the total cash reserves held by Midway and its associated firms will drop massively from $16.7 million in early February to $4.3 million in early May, with the coffers emptied in late June. Midway has had "continuous operating losses for nearly a decade," the report states, and the company continually relied on debt to stay in business. It also "overstate[d] the value of Mortal Kombat" -- but any further information on that topic, such as by how much the fighting franchise has been overvalued, was redacted. It is possible the company (or Thomas) has sought out offers for the property but has not found them in line with internal appraisals. Along similar lines, it was also noted that Citigroup was unsuccessfully employed to find a party to purchase Midway. "Citi failed to find interested investors," the report reads, but the surrounding passages (which likely included information on potential buyers or bids) were redacted. (A number of references were made to a decision by then-interim CEO Matt Booty to delay the release of TNA Impact! from spring 2008 to September 2008 to improve quality, during a time when Midway desperately needed "hit games." The move apparently had a significant negative impact on the company's cash flow.) Who is Mark Thomas? After months of murky attempted investigation into the identity of investor Mark Thomas, who purchased Midway for a shockingly low sum, the document also sheds some light onto the sequence of events surrounding the deal. It claims Thomas was approached by former Midway majority owner Sumner Redstone's National Amusements, and after less than a week, Thomas offered $1 million for the company. However, after some more due diligence, Thomas reportedly determined it would take "tens of millions of dollars to restructure Midway," but could not find a firm willing to finance such an operation. Deciding to attempt the restructuring himself, he lowered his offer 90 percent to $100,000. The filing maintains he was not working in conjunction with Sumner Redstone or his daughter, former Midway chairperson Sheri Redstone. Some speculative reports pegged the sale as largely a tax break maneuver by Sumner Redstone. Sumner Redstone testified as to not even being able to identify Thomas "if he was in the room with him," while Sheri Redstone testified she "knew nothing about the sale" in the first place. As far as Thomas' identity, he is said to be "a high net-worth individual who lives in Massachusetts and who makes private equity investments from time to time," with no personal debt and a net worth of $10 million. Midway's Fate The filing claims "it is likely that Midway and its creditors actually benefitted [sic] from the NAI/AHS transaction" -- but, unsurprisingly, the following explanatory paragraph was redacted. It is unclear what the full implications of these revelations are. But this week, new rumors surfaced suggesting that three parties, including Warner Bros. and Ubisoft, are considering purchasing the bankrupt publisher.

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