Hours of speculation about GAME’s survival are hopefully over as the retailer has brokered a new deal with its lenders.
The Board of GAME Group this evening announced it has ‘concluded discussions with its lending syndicate and agreed revised terms for its facilities’.
While GAME has agreed to ‘operate within lower limits of its existing facilities than was previously available’, the new arrangement around its finances means the firm will continue to trade.
The news comes after days of unofficial reports that said the retailer was facing problems with credit insurance covering new stock moving into stores and paying for new releases.
It was forced into having to issue a statement this morning responding to the speculation.
Most importantly, the renewed support from its stakeholders and lenders means the Board is confident GAME will meet its covenant tests for the period to 31 January 2012 when tested on 27 February 2012.
At the start of the year the group had confessed it may not meet the tests.
The Board now expects that the loss before tax and non recurring items will be around 18m for the year to 31 January 2012 – a figure actually lower than analysts had been speculating.
Ian Shepherd, CEO of GAME said "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."
As part of the new deal with its lenders, GAME has agreed to provide an updated strategic plan – which this time its lenders will get a say in approving.
The plan will cover all aspects of the business’s activities and strategy, including its overseas operations, a move it hinted at this morning.
GAME has 665 stores internationally (573 in continental Europe, and 92 in Australia), plus 610 in the UK and Ireland.
A year ago, the firm laid out a plan to embrace digital content in-store and be a more proactive specialist retailer. But a downward turn in the overall games market for boxed games in the UK has dampened the impact of CEO Ian Shepherd’s vision for the chain.