Mark Thomas: Midway's mystery man
Wanted: Information on Mark Thomas, head of Acquisition Holdings Subsidiary I LLC.
His identity is like Batman's: unknown. Everyone in the gaming metropolis is buzzing about who Thomas, the man who Friday agreed to pay $100,000 for an 87% stake in Midway, the publisher of Mortal Kombat vs. DC Universe, actually is. Here are some bare-bones facts:
- Thomas wants to be a passive investor, said Peter Kolevzon, an attorney with Kramer Levin Naftalis & Frankel, the New York law firm that is representing Thomas in the transaction.
- Thomas is the primary investor and beneficiary of the generically named Acquisition Holdings Subsidiary.
- He does not intend to be on Midway's board. Nor does he plan to get involved in the management of Midway despite his huge stake in the Chicago company, Kolevzon said.
- He is a U.S. citizen, city unknown.
- He is not granting interviews.
Bruce Wayne may be the Dark Knight, but is this Thomas character Midway's white knight?
For the last five years, the company's white knight was Sumner Redstone, a media mogul who ...
... racked up shares in the Chicago game company and bankrolled much of its projects via $70 million in loans from his company, National Amusements. But Redstone is running out of money, and creditors are breathing down his neck to pay off $1.6 billion in debt.
"Redstone is giving Midway away," said Michael Pachter, an analyst with Wedbush Morgan Securities. "That's crazy."
Midway's shares lost 5 cents, or 13%, on Monday to close at 33 cents, giving the company a market valuation of $30.4 million.
At first blush, it would appear that Thomas is getting a $30-million company for $100,000. But let's look deeper.
On the credit side of the ledger, he gets 87% of a video game publisher that owns the Mortal Kombat franchise. Midway also had $10.5 million in cash and $21.6 million in receivables as of its last quarter, ended Sept. 30. He also gets a $70-million I.O.U. that Midway once owed to National Amusements -- Midway's payments on that loan will now go to Thomas.
On the debit column, Midway has $150 million in outstanding loans, not including the $70 million it will owe Thomas. It also has a payroll of about 900 employees that it is struggling to meet. Last quarter, the company lost nearly $76 million on $51.4 million in revenue.
"The company is cash-flow negative," Pachter said. "So unless someone sinks more working capital into it, all [Thomas] can do is liquidate it and hope there's more than $100,000 left at the end of the day."
Mr. Thomas, if you're out there, we're dying to know more about you. Drop us a line.
-- Alex Pham
Image of Mortal Kombat vs. DC Universe game by Midway