Shares in struggling Midway Games Inc. – media mogul Sumner Redstone’s pricey gamble on the video game business – yesterday sank to a fresh all-time low amid growing investor worry about the sale prospects for the publisher of the “Mortal Kombat” franchise.
The company saw its stock fall 11.6 percent yesterday to 38 cents, less than a week after Shari Redstone, Sumner’s daughter, resigned her post as company chairwoman to focus on restructuring debt at National Amusements, the holding company for the Redstone’s portfolio of media assets, including CBS and Viacom.
Shari Redstone’s exit has been viewed as a possible sign that Midway might be ripe for disposal.
National Amusements is looking for ways to avoid having to sell more shares in CBS and Viacom in response to mounting problems surrounding its $1.6 billion debt load. Already, National Amusements has unloaded $233 million in CBS and Viacom stock to meet a margin call.
However, analysts have said that Sumner Redstone might have trouble finding a buyer for Midway – which was trading as high as $22.88 per share in late 2005 – even if he wants to unload it.
Midway on Monday reported that its third-quarter net loss more than doubled to a wider-than-anticipated $75.9 million, compared with year-earlier red ink of $33.5 million. Meanwhile, revenues fell shy of expectations to $51.4 million, despite improved year-over-year performance.
The company also is facing liquidity concerns.
Midway’s cash and cash equivalents shrank to $10.5 million in the third quarter, down from $27 million a year ago. Execs earlier this week declined to respond to analyst questions about the company’s ability to pay or refinance $79 million in convertible notes due in April.
President and CEO Matt Booty acknowledged that “our outlook for the future is hampered by. . . capital and liquidity issues,” a situation, he added, that has been made worse by the broader credit crunch.