Game Group filed a notice to appoint administrators yesterday, putting 6,000 UK jobs at risk, after rescue negotiations broke down with a distressed investment firm.
The beleaguered video games retailer which has 610 UK shops and 663 overseas, suspended trading in its shares at 2.39p and said "it is of the opinion that there is no equity value left in the group".
Ahead of a massive second-quarter rental payment on Sunday, lenders to the retailer have been locked in talks over a potential bid by OpCapita – a firm which buys struggling retailers – since last week. But Game's syndicate of six banks, including state-owned Royal Bank of Scotland, are thought to have rejected the only fully funded offer on the table from OpCapita.
A source said the investment firm had not come up with a credible business plan, but there remains the possibility the investment firm could still buy Game out of administration with far fewer stores.
OpCapita, which bought electricals chain Comet for a token £2 last month, offered to buy Game's more-than-£100m of debt and pay off all outstanding bills from suppliers.
An Opcapita spokesman said: "We put forward a fully funded proposal which would have preserved Game as a viable business in partnership with the suppliers, who have been very supportive."
The fortunes of Game have unravelled rapidly over recent months, as consumers have cut back on spending in its shops and suppliers have refused to deliver products amid deep concerns about the group's credit worthiness.
Game, whose chief executive is Ian Shepherd, filed a notice of intention to appoint the accountancy firm PricewaterhouseCoopers as an administrator. This does not mean that Game - which has 4,000 employees overseas, is in administration but it has just 10 working days to safeguard its future.
But even if a rescue deal is delivered, hundreds of the retailer's stores globally are likely eventually to close.
Game made an estimated loss of £18m for the year to 31 January.
- More about: