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Game Group opts for administration as efforts to resolve financial woes fail
LONDON (AP) ' Game Group, the troubled retailer of electronic games and player platforms, said Wednesday it will appoint an administrator after failing to keep the business afloat at a time when purchases are increasingly being made online.
Game earlier had suspended trading in its shares after key suppliers withdrew support. Shares closed at 2.39 pence Tuesday on the London Stock Exchange, having fallen from 62 pence a year ago.
"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 company said when announcing its intention to take shelter in administration.
"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."
Administration protects Game, which faces a large quarterly rent bill this month, from creditors during a period of reorganization.
Game, which is burdened with 100 million pounds ($160 million) in debt, is reportedly looking at plans to close half of its 610 British stores. The private equity group OpCapita had tabled an offer to take over Game and its debts, the FT said.
Game announced last month that Electronic Arts Ltd. had refused to supply the company with Mass Effect 3, expected to be a big-selling game.
Last week, Game said it was talking to suppliers and lenders in pursuit of agreements which would allow the business to continue. It said it was unable to get stock from several suppliers.
In the eight weeks to Jan. 7, covering the key Christmas period, Game's sales in stores which were open at least a year were down more than 15 percent in Britain and down nearly that much in its other European shops.
In the six months ending July 31, Game reported a net loss of 37.2 million pounds ($59.1 million) on revenue of 559 million pounds. A year earlier, Game's net loss was 15.4 million pounds.
Based in Basingstoke, England, Game has 1,300 stores trading under the Game and Gamestation brands including outlets in France, Spain, Portugal, Ireland, Sweden, Norway, Denmark, the Czech Republic and Australia.
The takeover of Gamestation and its 217 U.K. stores in 2007 left Game with a bloated portfolio of shops, with Game and Gamestation stores competing in some markets.