On March 21, the GAME Group of companies released a press statement indicating that no progress has been made with lenders regarding the company’s financing issues and that the company no longer had any equity value. This has lead to the decision to remove its listing from the London Stock Exchange:
The Board now considers itself to be unable to assess the business’s financial position, and is of the opinion that there is no equity value left in the Group. Therefore the Company has requested that the listing of its securities on the Main Market of London Stock Exchange plc be suspended from trading with effect from 7:30am today.
The Company will provide a further update in due course.
Only a few hours later, the company released an additional press statement formally announcing that the company is going into administration.
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.
The GAME Group PLC owns over 1200 retail outlets worldwide.
Analysis: Well, it’s finally happened. GAME has went into administration after what seems like a lifetime of shuffling around like a near-dead corpse in the face of better prices from Amazon and Steam. For those who don’t know, GAME has been losing sales for the past three years, and the last year was the worst with the entire group losing nearly 12% in sales for 2011.
The straw that broke the camel’s back is when GAME went to the major gaming publishers with cap in hand and asked them to help it through these financial difficulties with lowered prices on stock or longer payment terms.
The companies weren’t impressed and refused to give GAME any favours. The biggest blow was from Electronic Arts: they had the biggest title releasing in Q1 2012, Mass Effect 3, which GAME was not able to stock and publicly apologized to gamers who had pre-ordered the game. Capcom followed with Street Fighter X Tekken, and that was the end of the line.
The company looked for more lenders, but unfortunately with the company being in negative equity (i.e. it owed more money than it was worth), there was really no choice but administration.
Expect a lot of layoffs and store closings soon.