STRUGGLING BRITISH video games retailer Game, having been denied new titles by suppliers, has put itself up for sale and warned shareholders their equity could be worthless.
Shares in Game, which has about 1,270 shops in nine European countries and Australia, employing 10,000, crashed 71 per cent yesterday after the firm told investors: “It is uncertain whether any of the solutions currently being explored by the board will be successful or will result in any value being attributed to the shares of the company.”
Over the past two weeks, loss-making Game has had to tell its customers to shop elsewhere for new releases such as Electronic Arts' Mass Effect 3and Capcom's Asura's Wrathand Street Fighter X Tekkenafter failing to agree terms with the suppliers.
The firm said it remained in talks with suppliers and lenders in relation to terms of trade that would allow the business to operate within the banking facility agreed last month with lenders led by state-backed Royal Bank of Scotland.
Game is also seeking alternative sources of funding and reviewing the position of all of its assets in the UK and worldwide.
The firm, which faces intense competition from internet retailers and supermarkets which often sell new blockbuster titles as loss-leaders, must pay a quarterly rent bill in two weeks. Failure to do so could result in administration.
Shares in Game, which prior to yesterday had lost 94 per cent of their value over the past year, were down 2.5 pence at 1 pence yesterday morning, put the value of the business at just £3.4 million (€4 million).
The firm has been closing shops and moving into digital gaming, aiming to avoid the fate of other struggling specialist retailers such as music and films group HMV.
Game may look to US rival Gamestop, long seen as an obvious suitor, for a rescue deal. However, analysts doubted if any serious bidders would emerge ahead of an administration.
“We suspect that any potential suitor would prefer to wait for a formal administration process. Through a prepack, the suitor would have much greater flexibility around store liabilities,” said Singer Capital Markets analyst Mark Photiades. – (Reuters)
