UK’s Game Group may collapse, Australian Game retail chain in doubt

By Claire Reilly

The British retail business Game Group, parent company of Australia’s Game retail chain, is running the risk of collapse, with the retailer calling into question the value of its own shares. The retail chain has been struggling for some time, last year reporting net debts of £91 million for the six months to July 2011, up from £63.5 million a year earlier, London’s Financial Times reports

The company has been in talks with suppliers and lenders over recent months, issuing a statement on 29 February saying that it had been “discussing with its suppliers the level of support and engagement it needs from them over the coming months” in order to remain financially viable.

“There have…been isolated instances where it has not been possible to agree launch plans for individual game titles,” the company stated. “The Group confirmed that it will not be stocking a small number of titles from one supplier, Electronic Arts, during March and notes that this has caused speculation in the market.

“This situation, which is a result of ongoing discussions between the Group and EA, is a temporary one and indeed both businesses are already engaged in discussions about future launches together. It is always a matter of regret when customers are inconvenienced, and both the Group and EA are committed to ensuring that this situation does not occur again.”

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However, further to this statement, the company announced on Monday that it had still been unable to “source new products from a number of suppliers” and that it was seeking “alternative sources of funding” for its business.

“It is uncertain whether any of the solutions currently being explored by the Board will be successful or will result in any value being attributed to the shares of the Company,” Game Group said in a statement to the London Stock Exchange.

“The Board of Game is working actively to resolve these issues as quickly as possible…and [is] reviewing the position of all of its assets in the UK and international territories.”

It is not clear where Game Group’s announcement leaves the Australian subsidiary of the company. Game Australia has been contacted for comment.

Following Monday’s announcement, Game Group’s stock price fell more than 60 per cent, ending the day at 1.28 pence. This was an embarrassing final dive for the company, which has seen its shares fall in value from over £3 in 2008 down to just a penny.

A graph showing the share price of Game Group from 15 March 2007 to 13 March 2012. Between 2008 and 2012, the company's share price fell from  over £3 down to just 1.28 pence.

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