Game up for Game Group?
Filed under: Investing
Some distance from 2009/10 when Game saw profits of £90m. But rent cash-flow problems is now likely to see many of its 600 UK stores - employing 6.000 or so staff - close.
"The Board," an London Stock Exchange announcement stated, "now considers itself to be unable to assess the business's financial position, and is of the opinion that there is no equity value left in the Group. Therefore the Company has requested that the listing of its securities on the Main Market of London Stock Exchange plc be suspended from trading with effect from 7:30am today."
On the brink
Game Group is big company. It has 1,300 stores right across Europe employing a total of 10,000 people. But its £180m debt mountain is self-evidently huge, plus a sizeable VAT bill. Many of Game's stores in the meantime will continue to trade while a buyer is sought.
Buyer bewareUS rival GameStop and private equity operator OpCapita are both seen as likely purchasers according to the FT, though the banks are not thought to be in any hurry says the paper. The company has attempted to get behind its troubles with fresh lending agreements and more congenial trading terms, plus alternative funding sources.
But a tsunami of bills, including a £12m wage bill due the end of this month, has simply overwhelmed the company. However, Game has not gone into administration. It has a 10-day moratorium, which may give it time to find a buyer.
Yet with the continued dominance of Amazon and other online retailers delivering computer games to your door, often at a discount, Game is vulnerable. On the other hand, a slimmed-down Game with fewer stores - carefully avoiding duplication and twinned to a more focused management team - still has a chance. The games industry, remember, is still growing.