Much is relative. Last week was bad for Circuit City; on a comparative scale, not so much for gamer, Midway Games. Despite the crippling pressure of massive lingering debt potentially due ahead of its time, the company managed to do what the big retailer that’s sold their games couldn’t: buy more time.
Triggered by “change of control provisions” put into play when majority shareholder Sumner Redstone liquidated his position, Midway’s been facing down the prospect of Noteholder repurchase rights that, if exercised, could easily bankrupt the company.
At the end of December, Midway managed to reach a short term extension agreement with the holders of 7.125% convertible notes due in 2026. Holders of Midway’s other class of notes (6% Notes due a year earlier) were holding out.
Thursday, January 15th, the 6% Noteholders also agreed to terms. According to an SEC filing made late last week, both classes of Noteholders will now defer their decision to force the company to repay the notes at least until February 12th.
Some conditions are attached and a broad restructuring will likely be needed for Midway to escape the greater vice of this debt, but the new "Forbearance Agreement," at least gives the company a little more wiggle-room to try and negotiation a resolution.
According to the 8K, all of Midway’s 7.125% Noteholders are party to the new agreement. 98% of the 6% Noteholders agreed.
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