Home entertainment company Game on brink of bankruptcy
Gaming retailer announces it has 'no equity value left' as shares are suspended
Shares in console entertainment retailer Game have been suspended after the company admitted it had "no equity value left". The Basingstoke group, which has 1,300 stores worldwide and employs 10,000 people, said its offering had been "eroded" by competition from online retailers like Amazon. According to the Metro, Game itself has reported that the value of the company had essentially become zero.
The Times reports that some large-scale suppliers are refusing to do business with the company, and Game itself issued a statement this morning saying: "The board now considers itself to be unable to assess the business's financial position. We are of the opinion that there is no equity value left in the group."
Game asked that the trading of its shares on the stock exchange be suspended with effect from 7.30am this morning. The company, which borrowed £60 million from lenders last month to stay afloat, is looking into the option of using third party finance to rescue its ailing business.
Opcapita, a private equity fund that owns Comet, has expressed an interest in investing in the company. This would involve buying Game's debts from its lenders - principally The Royal Bank of Scotland. However, other firms are sceptical this model would be enough to save the console firm, whose share price has fallen sharply over the last year. Shares in Game closed at 2.39p yesterday, down 62p from a year ago.
The Sun reports that Game has debts of almost £180million and will go bust this weekend unless a deal can be reached. The company has £21million in rent costs due on Sunday and owes £10million in VAT. Game's financial troubles have been accelerating ever since Christmas: they were unable to stock major new titles, including Mass Effect 3, Street Fighter X Tekken, Ninja Gaiden 3 and Resident Evil: Operation Raccoon City. After disappointing results, the company's credit insurance was pulled and many publishers refused to take the risk of sending Game new stock.