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Midway Games to Cut 25% of Work Force
By LAUREN POLLOCK
Videogame maker Midway Games Inc. said it will lay off 25% of its work force, close its Texas studio and suspend development of several games in order to cut costs.
Earlier this month, Midway hired investment bank Lazard Ltd. to advise on its options as it grapples with serious debt issues. That move was prompted by controlling shareholder Sumner Redstone's decision to sell his 87% stake in the Chicago-based company to private investor Mark Thomas, activating a change-of-control provision on its convertible notes.
Midway's woes, which include a lack of big-selling games, persist despite recent data from NPD Group that highlight the videogame industry's resiliency amid the recession. U.S. videogame sales in November exceeded analysts' expectations.
Midway said Tuesday the work-force cuts, affecting 180 full-time positions, would be made at its Austin, Chicago and San Diego locations. The suspended projects, which had been scheduled for release in 2010 and 2011, haven't yet been made public.
Mr. Redstone sold his stake in Midway in an effort to resolve his own debt issues at his holding company, National Amusements Inc. Mr. Thomas agreed to buy the stake for $100,000, and also took $70 million of a $90 million National Amusements loan.
Mr. Redstone lost hundreds of millions of dollars on his Midway investment as the stock plummeted this year. Shares, which were flat at 19 cents in Tuesday trading, have fallen 93% year-to-date.