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March 14, 2012 7:19 pm
Hopes were rising for Game Group on Wednesday night after OpCapita, the private equity group, made an offer to buy out the struggling video games retailer’s debt.
Game said that a third party – known to be OpCapita – had “shown interest in providing additional funding for the company.”
It said the third party “was seeking a dialogue with the Group’s current lenders; however, there is no certainty to the outcome”. It also said it was uncertain whether the approach would “result in any value being attributed to the shares of the company”.
The FT reported on Monday that several groups, including OpCapita, were circling Game as it fought for survival.
Hilco, the retail restructuring group, is also interested in Game’s international arm, including its assets in Spain and Australia.
Rothschild, appointed last month to advise the retailer on a strategic review, including the possible sale of its European business, has expanded its remit to look for a buyer for the entire company. The sale process for Game’s international assets continues.
If OpCapita can reach a deal with Game’s lenders to provide funding and meet suppliers’ commitments, the company, which employs 6,000 people in the UK and 10,000 globally, can continue trading in its current form.
If the private equity group can secure 100 per cent of Game’s debt, it puts it in a strong position should Game be restructured through a debt-for-equity swap at a later date.
Last year OpCapita bought Comet, the electrical retailer for £2. However, people familiar with the situation were sceptical that OpCapita would look to put Game together with Comet.
Peter Smedley, analyst at Charles Stanley Securities, said the intervention of OpCapita “speaks to the crushing need to resolve this situation very quickly, ahead of the March end quarterly rent payment”.
Game’s shares fell 64 per cent on Monday after it warned it was “uncertain” whether discussions with lenders and suppliers would succeed, and that the stock could be left worthless. The shares rose 83 per cent to 2.10p on news of OpCapita’s interest.
Europe’s largest dedicated video games retailer by sales said it was also exploring alternative sources of funding and “reviewing the position of all of its assets,” adding that difficulties in securing new releases from suppliers had persisted.
Game was plunged into crisis after its several of its big suppliers, including Electronic Arts, one of the world’s largest video games publishers, said they would no longer supply the chain.
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