Video games retailer Game Group has issued a statement this morning admitting that its current negotiations with suppliers & lenders may not be enough to save the business.
In recent weeks Game has had to withdraw a number of leading titles from its shelves due to an inability to agree revised credit terms with key games manufacturers.
The retailer held an event for all of its suppliers in February asking them to trade with the business on reduced terms to help it overcome its current challenges, but within a week Electronic Arts, which produces several leading games titles including the hotly anticipated Mass Effect 3, said it would suspend supplying the business.
Game had only just agreed a new deal with its lenders which would allow it to pass banking covenant tests it had looked set to fail, but the conflict with its suppliers has now brought back to the brink of administration.
Today’s statement from Game read: “Further to Game’s announcement of 29th February 2012 and recent press speculation, the group confirms that it remains in discussions with its suppliers and lenders in relation to terms of trade that allow the business to operate within the facility provided by its banking syndicate, as announced on 3 February 2012, and to meet its revised strategic plan.
“While these discussions are ongoing, it has not been possible to source new products from a number of suppliers.”
Losses at the company for the full-year to January 31st 2012 are thought to total £18 million, as its trading was further dented by a migration of video game customers to online rivals.
A number of options are now being considered by the group in order to rescue the business, including selling off assets & finding alternate sources of funding, and it will continue to try and convince its suppliers to support it plans.
Despite these efforts however the company is now admitting that its strategy might not be enough to continue the business as a going concern.
Game’s statement continued: “It is uncertain whether any of the solutions currently being explored by the board will be successful or will result in any value being attributed to the shares of the company.”