Game Group Enters Administration

By Staff Reporter

Mar 26, 2012 11:33 AM EDT

Branches of Game and Gamestation close nationwide (Kentish Express)

UPDATE

- Game Group enters administration

- PwC chosen to take over running of the group

- Group CEO Ian Sheperd steps down

- 2,104 store jobs lost - 40% of UK workforce

- 15 jobs gone at the head office

- 277 of 609 branches of Game and Gamestation cease trading immediately, claims MCV

- Game and Gamestation websites both down

Official statement from Game Group:

"Further to our announcements of 21 March, the Board of Game has completed its discussions with lenders and third parties without resolution, and has therefore today appointed PWC LLP to act as administrators for the Group. This decision is taken after careful consideration and ceaseless interrogation of every possible alternative. The board would like to thank the teams of Game and Gamestation colleagues around the world for their exemplary dedication, passion and professionalism."

Game Group has entered administration, putting 6,000 UK jobs at risk as the owner of Game and Gamestation fails to find a buyer.

The group has 600 shops in the UK employing 6,000 people, plus another 600 branches and 4,000 employees internationally.

The administration process will be handled by Mike Jervis and Stuart Maddison of PriceWaterhouse Cooper, who gave some hope to employees of Game and Gamestation by saying: "we are hopeful that a going concern sale of the business is achievable."

The PwC statement continued: "Mike Jervis and Stuart Maddison of PwC were appointed joint administrators of the UK and Ireland operations of The GAME Group plc, Game Stores Group Limited, Gameplay (GB) Limited, Game (Stores) Limited, Games Station Limited, Game (retail) Limited, Gamestation Limited ('the group') on 26 March 2012. The appointment was made following the company's announcements on 21 March that the listing of its securities on the Main Market of London Stock Exchange plc had been suspended from trading and a filing of a notice of intention to appoint an administrator had been made."

The group will now be protected from its creditors - it owes rent, as well as a wage bill of £12m, £10m in VAT and £40m to suppliers.

Industry publication MCV reported on Monday morning that Game and Gamestation staff are "likely to be told today of which branches are to close and roughly how many jobs will be lost.

"The process of attempting to find a buyer will continue as Game downsizes, with hopes remaining that a potential suitor such as GameStop will move to acquire the downsized retailer."

Mike Jervis, joint administrator and partner at PwC said: "The group has faced serious cashflow and profit issues over the recent past. It also has suffered from high fixed costs, an ambitious international roll-out and fluctuating working capital requirements.

"Despite these challenges, we believe that there is room for a specialist game retailer in the territories in which it operates, including its biggest one, the UK. As a result we are hopeful that a going concern sale of the business is achievable."

It has also been reported that Game Group CEO Ian Shepherd has stepped down with immediate effect, according to an internal memo gathered by MCV. Shepherd said in the memo to staff: "I've said a number of times that the administrator, once appointed, takes charge of the business. Having two people try to do that is both confusing and a waste of money. With that in mind, I've agreed with Mike that I will step down as CEO and the business immediately - this is my final email to you all.

"I'm sad to confirm that no deal has been done, and so I have signed the necessary paperwork this morning to allow the appointment of administrators. The process has been finalised, and so Mike Jarvis from PwC takes charge immediately."

Although the company has been struggling for some time, it became most apparent in February when it was revealed that Game would not be stocking video game blockbuster Mass Effect 3 as the developers did not believe Game would sell enough to cover the cost.

This was followed by EA announcing that no new game after SSX would be stocked by Game; Nintendo and others also followed suit.

It is believed that Game Group was in talks over rescue deals with OpCapita, Walmart and GameStop but hopes were dashed when on 16 March negotiations fell apart and Game Group once again teetered on the brink.

OpCapita - which bought Comet last year for £2 - had its offer turned down by Game Group, but this was before administration became official, so a new offer may well be accepted now.

The group said in a statement on 21 March that it intended to appoint an administrator, this followed the announcement that shares in the group had become worthless and trading of them had been suspended.

Game has been forced into administration for a number of reasons, we speculate what went wrong with the group here

The collapse of Game Group has had a knock-on effect in the gaming sector, as independent retailers have seen a recent increase in trade.IBTimes UK spoke to Nick Elliot, owner of Barkman Computers in Kingston.

SOURCE:IBTimes

Game Enters Administration: What Happens Next?