Beleaguered video games retailer Game Group has announced today that it intends to appoint an administrator after failing to turn the business around.
The company currently employs around 10,000 people across its 1,300 stores worldwide, with more than 600 outlets and 6,000 staff members in the UK.
Earlier today Game announced that it had suspended trading on the London Stock Exchange due to no value being left its shares.
Last week the company warned that there may no longer be any equity in the business, and over the last year the firm’s share price has fallen from 62p to finish trading yesterday at just 2.39p.
From once being a favourite of city traders, Game has seen its business model decimated by the rise of digital downloads, increasing competition from e-tailers and supermarkets offering video games as loss-leaders.
A statement from the business read: “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 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.”
Critical discussions between Game and its lenders & suppliers had been ongoing for a number of weeks as the retailer tried to stem losses at the business, which were thought to total £18 million for the year ending in January, and address its net debt which as of last September stood at £91 million.
A breakdown in relations with major supplier Electronic Arts last month saw the games manufacturer withdraw it titles, including the eagerly anticipated Mass Effect 3, from the retailer’s stores.
Game had hoped to get suppliers to agree to reduced terms after it organised a new deal with its major lenders which had allowed it to meet its banking covenant tests, however with negotiations unresolved the company was forced into administration.
Last week rumours suggested private equity firm OpCapita, which purchased fellow struggling UK retailer Comet last year for just £2, was considering an acquisition of the business but no official statement on its interest has yet been made public.