Eidos faces fire sale if bidder walks away

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The Independent Online

Eidos, the Lara Croft computer game company, faces a fire sale of its assets to satisfy new banking arrangements after warning that its outlook as an independent company "remains challenging".

Eidos, the Lara Croft computer game company, faces a fire sale of its assets to satisfy new banking arrangements after warning that its outlook as an independent company "remains challenging".

The company revealed yesterday it had secured a £23m short-term working capital facility from the Royal Bank of Scotland and that it had received a 53p-a-share takeover proposal from an unnamed bidder, valuing the company at £75.2m. Eidos shares fell 1.2 per cent to 40p.

However, if a formal offer does not materialise or if alternative long-term funding is not secured by 25 March then RBS has the right to order a sale of assets to repay the bank's credit facility.

Although Eidos publishes some of the world's best-known computer games, including the Lara Croft Tomb Raider series and Championship Manager, it has been hit by delays in launching new and updated titles. John van Kuffeler, the chairman of Eidos, revealed the company's half year results yesterday which showed that sales had slumped from £78.7m in 2003 to £31.5m in 2004. Mr Van Kuffeler said that the first six months had proved "very difficult".

"Although we had expected to report an operating loss in the first half given the release schedule, this has been exacerbated by the deferral of the PC version of Championship Manager 5 as anticipated and the disappointing performance of some of the other titles released," he said.

Eidos turned a £6.2m profit for the first half of 2003 into a loss last year of £29m while its cash reserves fell from £58.1m to £11.8m.

The potential takeover offer is conditional on the bidder completing an unspecified corporate action. "However, there can be no assurance that this condition will be satisfied and no certainty that an offer will be made nor as to the terms on which any offer might be made," said an Eidos statement.

The company said the delayed release of a PC version of Championship Manager would now take place on 18 March with Play Station and Xbox versions published later in the spring.

The company has also been faced with higher costs to make its games compatible with new generations of hardware such as Sony's PlayStation Portable. Its research and development costs rose 14 per cent in the first half of the year.

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