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Midway stakeholder to reap windfall from debt repayments

Mark Thomas faces inquiry from bondholders after details of $30m debt ownership are revealed

Midway's elusive new majority stakeholder, Mark Thomas, stands to gain around USD 30 million from debt repayments made by the beleaguered publisher.

According to the Chicago Tribune, investors are eager to discover who Thomas is and what relation he has, if any, to Sumner Redstone, the former majority stake holder.

Following the sale of Redstone's 87 percent stake to Thomson for USD 100,000 and USD 70 million in debt, its has been revealed that Thomson is entitled to up to USD 30 million of the unpaid debt to Redstone's National Amusements Inc., to be paid before all other debts.

Even if only a fraction of this sum is ever paid it represents a significant windfall over the purchasing price of the stock.

The publisher's bondholders filed an objection in the bankruptcy court, claiming the secretive nature the Thomas-Redstone deal put them at a serious disadvantage.

"It's a very unusual situation," said Greg Bray, a lawyer at Milbank, Tweed, Hadley & McCloy LLP, which represents the bondholders. "We're all curious."

The bondholders filing said they "are informed and believe that Thomas is a partner of Georgetown Partners LLC, a small private-equity company," however, Bray explained this has not been confirmed.

The filing further described the deal as "tainted by highly unusual transactions by insiders ... that, to put it charitably, require significant scrutiny… there must be a connection between Redstone and Thomas given that Redstone essentially gifted his rights in [Midway] to Thomas."

Brandy Bergman, a spokeswoman for National Amusements, which owns the USD 70 million Midway debt, defended the action, saying: "NAI decided the prudent step to take was to sell its stake in Midway Games and to book the capital loss for tax purposes."

Midway US has filed for Chapter 11 bankruptcy in order to cope with mounting debts following the Redstone-Thomas deal.

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