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Midway Gains Reprieve In Bankruptcy Struggle
by Leigh Alexander
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January 6, 2009
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Midway says it's reached a forbearance agreement with its bondholders that will allow it to delay $75 million in senior note buybacks until February 19.
According to an SEC filing, the company is also currently negotiating with its remaining bondholders to reach a similar agreement. Midway's expensive buyback obligation went into effect when media mogul Sumner Redstone sold his controlling stake in the company on December 1.
If Midway fails to repurchase all of the bonds by February 19, it compounds a $90 million loan agreement with Redstone’s National Amusements company and increases total debt to $240 million.
Midway faces bankruptcy and stock market delisting, and recently reduced its staff by a further 25 percent after layoffs throughout the year, closed its Austin studio and terminated projects.
CEO Matt Booty has said that the company's struggles have been "amplified by the current economic conditions." The credit crunch led Redstone, once the company's primary backer, to lose millions in investments, likely motivating him to divest his stake in Midway -- which he sold to private investor Mark Thomas for just $100,000 and the assumption of $70 million in debt.
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