Game thrown lifeline by lenders

By GRAEME EVANS
Published on Friday 3 February 2012 12:28

Struggling computer games retailer Game has been handed a lifeline after its lenders agreed to revise the firm’s banking facilities.

Shares jumped 40 per cent today as the company, which experienced poor trading over Christmas, said it would be able to continue to trade.

However, it is expected to have to downsize its operations, possibly through the sale of its international operations, after the banks insisted on a lower level of borrowings going forward.

The company is now working on an updated strategic plan for review by its banks and which will cover all aspects of the business.

Chief executive Ian Shepherd added: “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.”

The company, which has 1,300 stores worldwide trading under the Game and Gamestation brands, fuelled fears over its future last month when it said it will not meet a banking covenant – a promise made to creditors to secure a loan – when it is tested at the end of February.

The warning followed disappointing Christmas trading, with like-for-like sales down 12.9 per cent in the eight weeks to 7 January, as a lack of new consoles and a squeeze in consumer spending hit the business.

The company now expects that losses for the year to the end of last month will be around £18 million, but the revised support of its lenders means it should now meet its covenant test.

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