Game thrown a lifeline
03 February 2012 11:17
Lenders to computer software retailer Game have thrown the embattled retailer a lifeline, having agreed to revise its banking facilities; however the agreement could well see a scaling-back of its operations and the possible sale of its international business.
Game experienced a poor Christmas, with competition from online operators, the consumer spending squeeze and the lack of new gaming hardware from the major manufacturers driving like-for-like sales down 12.9% in the eight weeks to January 7th. Last month there had been some fears for its future, when the company indicated it was not going to be able to meet a banking covenant. However the news of the financial lifeline saw the company's shares jump 40%. The company is now working on a strategic plan for review by its lenders that will possibly see the international business sold off and will almost certainly involve a far lower level of borrowing in the future.
Chief executive Ian Shepherd commented: "We're pleased to reach agreement with our lenders, but should be under no illusions about the challenges in our market or the hard work that is required to deliver our strategic plan."
The 1,300-store chain now expects that losses for the year will be in the region of £18 million but, thanks to the new financial agreement, Game will be able to meet its obligations to creditors.
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