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Midway raises funds through stock placement

Publisher Midway Games has staved off any imminent financial woes with the raising of $35 million through the private placement of preferred stock with two major institutional investors.

The company plans to use $13.125 million of the money to redeem outstanding preferred stock, with the remainder (less transaction costs) to be used for game development and as working capital to finance inventory and receivables.

Under the terms of the deal, the newly issued Series C Preferred Stock is convertible into Midway common stock at a 30 per cent premium over the closing price of the stock on May 15th, namely $4.60 per share. The investors also have a one year option open which allows them to purchase up to $12.5 million of additional preferred stock which is convertible at $5.05 per share.

The Series C stock matures on March 15, 2006, and carries a 5.75 per cent dividend which is payable quarterly in cash. Also included in the deal is a three-year warrant for the investors which enables them to purchase up to 1.14 million shares of common stock at an exercise price of $4.60.

"This financing further strengthens our balance sheet," commented recently appointed Midway CEO and president David Zucker, "and provides additional resources to bolster our solid pipeline of upcoming releases."

This is certainly a positive move for Midway, giving the company significantly more breathing space to effect the changes required to the business to make it back into a major force in the publishing market.

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Rob Fahey avatar
Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.