1 Apr 2012

Game on for high street computer store

Turnaround investment firm OpCapita is set to keep open 333 shops and save 3,100 jobs, with reports that it is to buy a substantial part of the Game Group, currently in administration.

The UK operations of the retailer, which trades as Game and Gamestation, collapsed into administration on Monday, triggering 277 store closures and 2,104 redundancies.

Administrator PricewaterhouseCoopers, which was not immediately available for comment, has been searching for a buyer for the business while the remaining shops were kept open.

OpCapita is understood to have paid a nominal amount, believed to be £1, for Game’s assets.

But the real cost will be taking over the company’s £85m debts. It is understood the company’s lenders, led by Royal Bank of Scotland, will have agreed to roll forward the debts at the same time as taking a slight reduction.

OpCapita was among a number of potential bidders for the remaining assets. It specialises in investing in and turning around stricken retail chains.

Game’s demise followed a string of profit warnings and the failure of nervous suppliers, including Electronic Arts and Nintendo, to go on providing new games.
The retailer had a £21m rent bill due last week and faces a £12m wage bill this weekend.

Dismal Christmas

There is also £10m in VAT and £40m owed to suppliers. Game suffered a dismal Christmas and was later forced to ask suppliers for more generous trading terms.

But many stopped supplying it with new releases, such as Mass Effect 3 and Street Fighter X Tekken, leaving fans disappointed and adding to the group’s trading woes.

Game agreed fresh lending facilities with banks last month and began seeking access to alternative sources of funding earlier this month.

The group has already signalled that losses for the year to the end of January are likely to be around £18m.

Place on the high street

When Game was on the point of collapse in early March, many analysts retained the belief that there was a place on the high street for a games retailer.

Steve Boxer, a games journalist, told Channel 4 News: “The supermarkets… are never going to stock anything other than the biggest games… so they’ll never offer the sort of choice you get at Game.”

Game’s unique service, he said, was to allow consumers to try out games before buying them. “With Amazon or play.com, you’re taking a punt as to whether or not you’re going to like that game.”

And Mr Boxer predicted that a high street without a games retailer would mean manufacturers selling less. “The less clued-up punters will have, really, nowhere to go if Game goes down. The only possible outcome will be that people buy fewer games,” he said.