Beleaguered high-street retailer GAME has had its shares suspended from trading as it enters the final few days of a bid to save the company from going bankrupt.
GAME Group, which owns the GAME and Gamestation high-street brands, has been under increasing financial pressure of late. Poor Christmas sales led to an inability to pay debts, directly causing a loss of confidence which has led to major publishers refusing to provide stock on new-release titles
The result: a spiralling problem where GAME Group misses out on sales because it has no stock of new-release games like Mass Effect 3, leading to further poor financial performance, leading to more publishers refusing to provide stock. It's an issue which has led to strongly denied rumours of wage payment delays
and, most recently, the appointment of Rothschild to find a buyer
Time is running out, however. The company is believed to have just days left to find the cash it needs to pay rent on its high-street properties as well as to meet repayment terms mandated by its creditors. Should it fail to find a buyer willing to stump up the cash in the next few days, GAME Group will be forced into insolvency - a move which would have a serious impact on the UK gaming market
The news that GAME Group's shares have been suspending from trading, following a precipitous drop which saw the company's value almost wiped out as investors bailed in ever-increasing numbers, isn't good - despite the move coming from the GAME Group's board itself, following discussions with lenders. 'The board 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,
' a GAME Group spokesperson explained in a statement to press.
'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.
The suspension comes as GAME Group enters talks with what it describes as 'a potential third party provider of finance
.' While it is naming no names, private investment partnership and Comet owner OpCapita has been suggested as a potential suitor.
Industry publication MCV
, meanwhile, claims that GAME Group is looking to enter voluntary administration in the hopes of rising again as a 'phoenix company' under a new name and with fewer stores. Though strongly denied by GAME Group management, MCV's sources suggest that the renewed company would operate GAME-branded stores while closing Gamestation outlets in order to reduce operating costs.
That may not be a bad move: following GAME Group's acquisition of Gamestation from previous owner Blockbuster back in 2007 for £74 million, GAME Group has continued to operate the two brands side-by-side. As a result, many towns and cities across the UK have at least two GAME Group-owned stores - in some cases three or four. The additional overheads of running multiple stores a few doors down from each other are, it has been suggested, one of the reasons GAME Group has landed in the financial mire now.
Closing the Gamestation brand down, however, would have a very real human cost in the form of lost jobs. Should it save the entire GAME Group from closure, it may be a price the company is more than willing to pay.
: GAME Group has formally announced its intention to appoint administrators, suggesting that MCV's claim of a phoenix rebirth plan is not a million miles away from the truth. Sadly, this scuttles any hope of external investment saving the company as it exists today.
'Further to this morning’s announcement of the suspension of trading in shares of Game Group plc, the board has concluded that its discussions with all stakeholders and other parties have not made sufficient progress in the time available to offer a realistic prospect for a solvent solution for the business,
' the company explains in an updated statement. 'The board has therefore today filed a notice of intention to appoint an administrator.
'In the short term the Board’s intention is that the business will continue to trade and discussions with lenders and third parties will continue under the protection of the interim moratorium.