GAME Gets Administrator, CEO Resigns

March 26, 2012 -

Troubled UK video game retailer GAME has officially entered into administration, with PricewaterHouseCooopers named as its administrator. According to a GamesIndustry International report, the company has taken both game.co.uk and gamestation.co.uk down, and has begun closing stores in the UK. On its official Facebook page GAME has also informed customers that all gift cards, GAMEWallet funds and Game Reward cards have been suspended, and that stores also will no longer accept hardware or software for trade-ins.

On Twitter various customers have been tracking store closures; so far stores in Plymouth, Birmingham, Bath, Liverpool, York, Stafford and more have been confirmed as closed (our own beemoh points out this MCV report which is tracking store closures in real-time). The closures follow a hopeful statement from PWC that GAME still might find a buyer:

"The group has faced serious cash flow 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," said Mike Jervis, joint administrator. "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."

The Sunday Times reported over the weekend that a consortium of GAME's lenders led by Royal Bank of Scotland had tabled a bid to buy the company out. According to that report, the group is planning to add the existing GAME debt of £85 million into a new company with a smaller chain of stores. That report comes from C&VG.

Finally, GAME CEO Ian Shepherd has stepped down and confirmed several store closures. He also warned current employees not to believe everything they read in the media. That information comes from a memo obtained by MCV sent out to GAME employees on Friday by Shepherd. You can read the whole thing below:

Hello

Although I haven’t got a lot of new news to update you with this morning, I wanted to write to you all in response to the feedback I’ve been hearing. One of the main threads I’ve heard has been your passion for the business, your determination to get through this and your commitment to each other and to the brands. That is enormously impressive, and is one of the reasons why this is a business worth fighting for. I’m grateful for all of the support you continue to show.

A second thing I hear a lot, though, is “why do we keep hearing more on in the internet and through the trade press than we do officially through the company?”. That bothers me a lot, because it is really important to me to be as open and straight with all of you as I possibly can be. The reality, I’m afraid, is that a lot of what you read online is speculation about things that might happen, rather than facts about what actually is happening. Some of it ends up being right, a lot doesn’t, but I can completely understand why it feels like you are reading more online than you are hearing from us. In reality, there are only a few solid facts you should hold on to:

• We’ve filed a notice of intention to appoint an administrator, which gives us the ability to trade with some protection from our creditors. That’s not the same as saying we’ve already gone into administration, despite that being what a lot of online sites are saying – they don’t fully understand the process they are writing about.

• If a buyer for the business doesn’t emerge over the next few days, we will appoint an administrator very early next week.

• As I’ve said before, I think the priority of any administrator will be to sell the business as a trading entity – a ‘going concern’. They will have full managerial control and will certainly make big changes, but their initial priority will be to trade rather than liquidate.

• In preparation for any potential administration next week, we’ve made arrangements to ensure everyone is paid for the work they’ve done this month.

Everything else you read online is simply speculation. It’s painful to read so much coverage and feel so powerless about it, but I’m afraid it goes with the territory of being in this awful situation.

Finally, the other thing I hear a bit of is anger – how did we come to be in this situation when other, supposedly weaker retailers have limped along? I share that frustration. I have fought, and all of the management team here have fought with every ounce of energy to avoid arriving at this point. That we haven’t succeeded makes me angry and sad in equal measure. As your CEO, this is my responsibility and I don’t shirk from that.

After all of that, I’d reiterate one final message from earlier in the week. The best thing we can do now is demonstrate clearly, to an administrator and to potential buyers, that this is a great business filled with great, committed people. We have a rocky road ahead, but this is not the end for this business on the High Street. Stay with it.

Best
Ian

Ian Shepherd
Chief Executive
GAME Group PLC

 
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