The Chicago Tribune went looking for the mystery investor whose $100,000 buy-up of 87 percent of Midway could reap a profit in the millions under Chapter 11 reorganization. They didn't find much.

"Mark Thomas" purchased Sumner Redstone's interest in Midway last year for a hundred grand - fractions of pennies on the dollar - and took control of 87 percent of the company. Because of the terms of the deal, Thomas' buy-in both forced Midway's hand at filing for Chapter 11 protection, and jumped him to the front of the line for millions if the company gets court protection while it restructures and pays obligations to its creditors.

Says the Trib writers:

Mark Thomas bought media magnate Sumner Redstone's 87 percent stake in Chicago-based Midway last year for $100,000 and $70 million in debt. Under the terms of the convertible debt, bondholders could ask for accelerated repayment if there was a change in ownership. The need to pay out on those obligations, coupled with Midway's squeezed liquidity, prompted the company to file for Chapter 11 protection from creditors Thursday.

Of the $70 million in debt that Thomas took over from Redstone, $30 million is a secured claim that puts him ahead of unsecured creditors, including holders of the convertible debt.


That means, in a nutshell, "Mark Thomas" gets paid first. And even if the court-overseen restructuring pays out a fraction of that $30 million claim, it's likely to be a sum well over the $100,000 buy in Thomas made.

Midway bondholders filed an objection in that said they are at a disadvantage because of a secretive bankruptcy that is "tainted by highly unusual transactions by insiders ... that, to put it charitably, require significant scrutiny."

The Tribune notes that Thomas has disclosed nothing about himself, not even his residence or professional background. They followed a tip that Mark Thomas might be a partner in Georgetown Partners LLC, a Bethesda, Md.-based private equity company. Their efforts to contact that Mark Thomas were unsuccessful.


The bondholders' objection claims "there must be a connection between Redstone and Thomas given that Redstone essentially gifted his rights in [Midway] to Thomas." Thomas bought up Redstone's stake for $0.0012 a share back in November.

Guessing Game over Mark Thomas Vexes Midway Games' Creditors [Chicago Tribune, thanks William V.]