Midway’s Credit Line Cut

Representatives of Midway Games have admitted that the company’s failure to comply with a covenant of its credit line before the end of the second quarter has resulted in the line being terminated. The problem occurred because of a $23.05 million write-down of capitalized product development costs. The company has indicated that the letter of credit facility has a maximum availability of $15 million and it had outstanding letters of credit of $300,000 at June 30. The company did receive a payment of $4 million on August 12th though, relating to tax sharing and separation agreements, from its former parent company WMS Industries, inc.