UK video game shop chain GAME has claimed it's in good shape despite the collapse of Comet, also owned by OpCapita.
Comet is in administration less than a year after OpCapita bought it for just £2. Now, eyes are turning on GAME, with some worried it will suffer a similar fate.
But according to GAME boss Martyn Gibbs the retailer is doing well and set to make £20 million by the end of the current financial year.
I have all the cash I need to trade through peak [period], he told The Sunday Telegraph. There has been nothing that I tabled that I didn't get investment for. I can't ask for more. OpCapita's investment amounted to significant millions apparently and any interest payments to OpCapita are not at all impeding the business.
In April OpCapita picked up GAME's UK assets, including all 333 UK GAME and Gamestation stores that remained open during its administration.
The acquisition brought the UK business out of administration, kept some 3000 staff in employment and stabilised the business after it found itself unable to stock some of 2012's biggest games.
Now, according to Gibbs, GAME has maintained its market share at around 35 per cent despite operating from half the number of stores, has cut £17 million of costs and opened three new stores.
Apparently the launch of FIFA 13, Halo 4 and Assassins' Creed 3 have helped. Tonight's launch of Call of Duty: Black Ops 2 will boost revenue, too.
Gibbs said he is very close to the suppliers of GAME and insisted they have maintained their support, but the company is still without credit insurance.
I would rather we had it, but have managed without it, Gibbs said. We will hopefully achieve it sometime in the future. But, we have never factored it in.
According to The Sunday Telegraph OpCapita has structured its investment so GAME is charged interest on its funding and OpCapita will be the leading secured creditor if it collapsed.
Leading credit insurers have refused to support GAME since OpCapita bought it, the paper says, with two of the largest, Euler Hermes and Atradius, upset OpCapita failed to pay off a £40 million debt to suppliers when it bought the business. OpCapita was not legally obliged to do so, so the insurers had to fork out huge payments.
GAME has £106 million of loans held in the form of payment in kind (PIK) notes. Interest on PIK notes is normally at least nine per cent, so, The Sunday Telegraph notes, GAME could be making annual interest payments of £10 million.