Game taken back to the brink as creditors shun rescue plan
Video game company needs to secure new financial backers by end of month to avoid painful restructuring
Video games specialist Game was teetering on the brink of collapse on Friday after a rescue deal put forward by private equity firm OpCapita appeared to have been given the cold shoulder by lenders who are owed more than £100m.
Earlier this week, OpCapita, the turnaround specialist which recently bought electricals chain Comet, put forward a proposal to the retailer's banks – led by state-controlled Royal Bank of Scotland – to take over its debt and settle accounts with suppliers who are owed £40m.
The plan offers a way back for the retailer, which officially warned investors at the start of this week that it was on the brink of administration. A spokesman for RBS, which is owed £45m, said talks with all parties were continuing, but insiders suggested further discussions had not taken place even though time is short.
Game needs to secure new financial backers quickly so it can pay its quarterly rent bill, due on 25 March, and avoid a painful restructuring that is likely to involve heavy job losses at the group, which has around 6,000 UK staff.
The situation is a complicated one as a number of banks are involved in the rescue talks, with Barclays, HSBC and La Caixa all understood to be owed around £30m each. Another banking source also suggested the OpCapita deal was still a viable option.
The crisis at Game was set in train earlier this year when worried lenders reduced the retailer's borrowing facilities. That meant the management team, led by chief executive Ian Shepherd, was forced to ask suppliers for discounts. However major industry players such as Electronic Arts and Nintendo refused, leaving the retailer without stock of new titles such as Mass Effect 3 and Mario Party 9.