Eidos on the brink as investors flee sinking ship
Eidos confirms it may be close to securing a sale to an unnamed party, but it's not enough to keep the City happy. Tomb Raider and Hitman slip, too.
Eidos released its six-month results today for the period ending December 31, 2004, showing an operating loss of £29.2 million. Shares dropped of more than 30 per cent yesterday ahead of the news.
The company also confirmed that it received a buy-out offer earlier this month and that a deal is still possible. A "proposal received on 2 March 2005 of a possible cash offer at a price of 53 pence per share, subject to one principal condition," was made, according to a statement made to the City this morning. "However there can be no assurance that this condition will be satisfied and no certainty that an offer will be made nor as to the terms on which any offer might be made. This disclosure has not been made with the consent of the other party."
"Given the financial position and standalone prospects for the Company, it is the Board's current intention to recommend this offer to shareholders if it is made," said Eidos chairman John van Kuffeler.
Shares in Eidos were trading at an all-time low this morning, down to 35.5p on the back of heavy trading. A new credit line of £23 million has been secured with RBS to see Eidos through the coming weeks, with the company showing net cash funds of £11.8 million at 31 December 2004, down from £58.1 million from the previous year.
The situation for Eidos is now desperate.
"If an offer for the Company has not been announced in accordance with Rule 2.5 of the Takeover Code or alternative funding has not been put in place by 25 March 2005, or if any such offer lapses, RBS has the right to require the Company to undertake an orderly disposal of assets, and/or intellectual property, of an amount equal to the facility plus associated fees," the statement continued.
"In that event, and if such disposal is not agreed by 22 April 2005, the adequacy of the Company's working capital facilities cannot be assured."
In other bad news, Eidos confirmed that new Hitman and Tomb Raider games have slipped to fiscal 2006, with a "strategic decision" having been taken to delay the next titles in both series from fiscal 2005, which ends on June 30th.
Eidos's leading product for the half year was Shellshock: Nam '67, which achieved sales of over 900,000 units worldwide.