GAME Group is in a race to secure £180m to pay creditors or face administration, The Sunday Times reports.
The specialist giant apparently has a £21m rent payment due on Sunday, a £12m wage bill due shortly after, and owes more than £10m in deferred VAT and £40m to video game suppliers.
The paper says that GAME could be put into administration this week as lenders believe the firm will not be able to find a backer in time. Any investor, as well as the above mentioned debt, would have to pay the firm's six banks - including Royal Bank of Scotland £100m.
GAME is in emergency talks with a number of potential new backers, the paper writes.
OpCapita is interested, but the lenders are sceptical that the private investment specialist has the means to rescue the stricken High Street giant.
Wal-Mart and GameStop are believed to be two other likely suitors. Hilco is reportedly interested in GAME's international assets.
GAME hit trouble following a poor Christmas sales period. The business believed it would be a much stronger Christmas period, telling investors in September that they were confident in the software line-up which included Modern Warfare 3, FIFA, Halo, Zelda, several 3DS titles, Skyrim and Saints Row: The Third.
Like many retailers, GAME relies on Christmas to generate revenue, and uses a banking facility to get it through the quieter Spring and Summer months.
However, following a disappointing festive period, the Group had to renegotiate a deal with its lenders (namely RBS, Barclays and HSBC). It received a significantly lower facility, which bought the firm some time. However, in order to survive until the profitable Christmas period, GAME needed better supplier terms.
It reached out to its publishers, even holding an event at BAFTA for 80 to 90 of its partners to explain what was required in order to see the retailer survive.
Although early reports suggested the meeting was a success, GAME has failed to win over some big suppliers. The firm has since missed out on major release Mass Effect 3, and has lost support from Capcom, Nintendo, Microsoft, Activision, Sega, Tecmo Koei and more. Sony is a notable exception, supplying GAME with Vita units and games such as Twisted Metal
The situation has taken GAME to the brink of collapse.
Find £180 million in a week? That'll be a tough challenge considering that a number of its suppliers won't do business with the Game store. I wonder how it'll raise the capital required?
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