Thousands facing axe as Game ends
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COMMENT: P2 GAME Group could go into administration as early as tomorrow with the loss of thousands of jobs, after eleventh-hour negotiations to buy the retailer collapsed on Friday.
The administration would be the biggest since the failure of Woolworths. It would trigger the sale of some of Game’s better assets to private equity firms Opcapita or Sun Capital Partners.
US retailer Gamestop is also said to be interested but retail restructuring fund Hilco is now understood to have lost interest.
Thousands of jobs will be lost even if some assets are sold.
Game, which employs 6,000 people in the UK and has 600 stores, applied for voluntary administration last week.
Accountancy giant Pricewaterhousecooper is expected to be appointed as the administrator tomorrow morning.
One close source said: “Game is likely to go into administration on Monday and the process of selling its assets will begin but this won’t be a pre-pack, where a company is bought immediately out of administration.”
Opcapita had tried to reopen talks late on Friday to buy the company after Game’s syndicate of lending banks, headed by state-owned Royal Bank of Scotland, had rejected a different bid earlier this month.
Another source said: “There was contact between the banks and Opcapita late on Friday in the hope of reviving some sort of deal. The banks felt that selling Game out of administration would leave them facing a colossal write down on what they invested. But, in the end, they decided there wasn’t enough value in what Opcapita were offering. It wasn’t anywhere near 100p in the pound.”
Game, saddled with more than £100 million debt, also has a £12 million wage bill due at the end of the month. It owes £40 million to suppliers and has a £21 million quarterly rent payment due today.
According to a new retail risk report from trade credit insurer Atradius, there will be more insolvencies in 2012.
Marc Henstridge, head of risk at Atradius UK & Ireland, said: “We’ve seen a significant increase in insolvencies in the past six months and unfortunately this seems set to
“With the next rental quarter payment due today, a raft of retailers will have no other option but to shut up shop.”
Retailers Jaeger, JJB Sports, Thorntons, Clinton Cards, Maplin, HMV and Mothercare have all been flagged by analysts as struggling.
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