Tue, 20 May 2014 | BUSINESS NEWS
Game Digital is planning a return to the London Stock Exchange within the next month, two years after it fell into administration.
The video game retail chain, formerly Game Retail, revealed on Sunday (18 May) that it is planning a £400 million flotation. The company, which has 560 stores in the UK and Spain, hopes that the decision will help it clear debts of more than £120 million.
US activist hedge fund Elliot Advisors owns 99 per cent of Game, with Henry Jackson owning the remaining one per cent having fronted the buy-out of the chain back in March 2012. The flotation aims to raise £12 million in the sales of shares, which could trigger a windfall payout for Elliot Advisors as it sells down its stake.
The company entered administration after sales could no longer fund its vast portfolio of high street stores and overseas expansion plans, leaving it with a large rent bill it could not pay. This in turn led to a landmark insolvency law case earlier this year in which it was ruled that Game would have to pay its outstanding rent to a consortium of landlords, closing a previous loophole that allowed a company to avoid paying rent for up to three months if it had appointed administrators soon after the quarterly rent day.
Game’s chief executive Martyn Gibbs said the group had been “transformed” into a stronger multi-channel business since its restructuring and having slimmed down costs by halving its store portfolio. He added: “The business is now well set to capitalise on the growing market for gaming content, whether digital or physical, new or pre-owned.”
However, the news has been met with a degree of scepticism from the City, with many questioning if the video game market is still lucrative enough for Game to turn around its fortunes.
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