Redstone to Sell Control of Midway Games

Sumner Redstone has sold his controlling stake in videogame company

Midway Games

(MWY)

to a private investor, according to a report.

Redstone's holding company, National Amusements, is expected to announce Monday that it sold its 87% stake in Midway to investor Mark Thomas, a move that represents a significant loss on the media mogul's investment but secures a hefty tax benefit as he negotiates other asset sales, the

Wall Street Journal

reports.

National Amusements is in talks with its banks to restructure its $1.6 billion debt pile after breaching one of its debt covenants. As part of the restructuring, the Redstone family has been discussing selling some of its assets, including some movie theaters and a holding in slot-machine company

WMS Industries

(WMS) - Get Report

, the newspaper reports.

The sale of the Midway stake, agreed upon Friday, wasn't conducted as part of a deal with the banks but is likely to ease the pressure on the Redstone family and potentially contribute to a final deal.

Thomas has agreed to pay about $100,000, or $0.0012 a share, for the Midway stake and will assume $70 million of senior secured and unsecured debt, National Amusements is expected to detail in a 13D filing with the

Securities and Exchange Commission

on Monday, the Journal reports.

Redstone poured hundreds of millions of dollars into the company, only to see his investment fizzle as Midway Games failed to create new hit games and its stock collapsed. Redstone's stake had a market value of just $30 million Friday, according to the newspaper.

Shares of Midway Games closed Friday at 38 cents.

This article was written by a staff member of TheStreet.com.