RBS urged to act before GAME slips into oblivion

A source close to OpCapita has told MCV that chief lender RBS must act fast to save GAME before it slips into administration at the weekend.

OpCapita, which owns UK retailer Comet, is understood to have the cash ready and in place to repay GAME Group’s debts. In addition, it has a management team on standby ready to swoop in and begin work immediately on repositioning the business on a road back toward profit.

However, MCV understands that both OpCapita and GAME management have become frustrated as RBS drags it heels. A source close to the negotiations has expressed their disbelief at the banks’ unwillingness to enter into meaningful conversations” with potential buyers.

Administration would be a very bad outcome for everyone involved,” the source confessed. The clock is ticking before rent day this weekend.”

Although many from within the industry still favour a GameStop buyout, OpCapita remains a compelling proposition for a takeover.

MCV has been told that OpCapita still sees the specialist model as being relevant to customers”, quietening fears that it would look to generalise GAME’s High Street offer or somehow integrate the brand into its Comet operations.

We are not asset strippers, we’ve never stripped anything,” our source told MCV. We’re about investing and improving. It’s a point of difference and we’re proud of it. We focus on running businesses. That’s what we’re about.”

Although a management restructure would be the first move following a potential takeover, OpCapita is not targeting short-term job cuts at the chain.

PREVIOUS SUCCESS

Despite news of recent job cuts at Comet, OpCapita has recently led Comet to its most successful month for two years in February. It did this through implementing its own management team whilst integrating key figures from the previous regime.

It did the same with furniture and electrical French retailer BUT in 2008. That was at a time when the recession was looming and retail was in fierce decline. Analysts labelled the swoop as ill advised, yet a turnaround has been successfully delivered.

Financial News said of the BUT deal last year that the days when buyout firms were able to generate returns on their investments through clever financial engineering and cheap leveraged financing alone are long gone forcing firms to return to the core approach of creating value by making companies more robust ands efficient”.

Interestingly, OpCapita places its relationship with suppliers as key to any retail takeover. Of course, supplier relationships with the current GAME management has played a large part in bringing the retailer to the situation we have now, with GAME unable to secure stock from key partners.

In fact, alongside supplier relationships OpCapita has identified a number of key opportunities for GAME. It maintains belief in the GAME brand and is also impressed by its relationship with customers and loyalty card schemes. Pre-owned has also been pegged as a sector of particular interest, and OpCapita management also believes there are huge growth opportunities in digital and online.