Lenders prove they are Game with lifeline to computer games retailer

By PERRY GOURLEY
Published on Saturday 4 February 2012 00:00

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

Shares rose sharply on yesterday’s news which the company, which was hit by poor trading over Christmas, said would enable it to continue to trade.

But the group 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 in the future.

The company is now working on an updated strategic plan for review by its banks 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 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 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 on consumer spending in the festive period hit the business.

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

Shares in Game closed up 24.6 per cent, or 1.31p at 6.64p.

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