Game admits shares are worthless as rescue fails

Administrators lined up for distressed retailer after talks between banks and OpCapita break down
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The Independent Online

Game Group filed a notice to appoint an administrator 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".

If, as expected, Game does collapse, it would be the biggest administration of a UK-listed retailer since Woolworths in November 2008.

Ahead of a massive second-quarter rental payment on Sunday, lenders to the retailer have been locked in talks over a rescue bid by OpCapita – a firm which buys struggling companies – since last week. But Game's syndicate of six banks, including state-owned Royal Bank of Scotland, rejected the offer from OpCapita.

A source said the distressed investor had not come up with a credible business plan within the tight timeframe.

OpCapita, which bought the electricals chain Comet for a token £2 last month, offered to buy Game's debt of more than £100m and pay 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.'" It is possible that OpCapita could still buy Game out of administration with significantly fewer stores.

The fortunes of Game have unravelled rapidly over recent months, as its sales have tanked and suppliers have refused to deliver products amid deep concerns about its creditworthiness.

Game, whose chief executive is Ian Shepherd, filed a notice of intention to appoint the accountancy firm PricewaterhouseCoopers as an administrator yesterday, giving it 10 working days to try to safeguard its future.

Even if a rescue deal is delivered, hundreds of its stores globally are likely eventually to close. Game has 4,000 employees overseas. Three big suppliers – Electronic Arts, Capcom and Nintendo – have withheld their latest products from the retailer in recent weeks.

Game made an estimated loss of £18m for the year to 31 January. Like-for-like sales plummeted by 15.2 per cent for the eight weeks to 7 January. It warned on profits twice between November and the start of this year.

PwC has been advising Game's syndicate of six banks: RBS, Barclays, HSBC, Allied Irish Banks and Bank of Ireland, as well as the Spanish lender La Caixa.

Game hired advisers at Rothschild in January to sell its international operation but the remit of the bank was widened this month to fnd a buyer for all its assets in the UK and overseas.

GameStop, the world's biggest video games retailer, is considering buying parts of Game in countries, such as Spain, and possibly the UK.