"Real risk" bosses may pull the plug on GAME, insiders claim
In discussions with legal advisors.
GAME's bosses may pull the plug on the embattled high street shop, insiders have claimed.
Directors are considering cutting their losses after GAME failed to secure stock of Mario Party 9 and, crucially, Mass Effect 3.
Indeed GAME will not stock any of EA's planned March releases, including Tiger Woods 13, FIFA Street, and The Sims 3 Showtime.
A source "close to the situation" told The Express: "There is a real risk that GAME's directors will pull the plug because they can't be sure that the company can survive through the next trading season, and then insolvency becomes inevitable.
"They are in discussions with their legal advisers about whether to shut up shop rather than rack up more losses."
GAME could miss out on a potential £7 million in revenue and £2.5 million in profit by not stocking Mass Effect 3, an analyst predicted last week.
Last month GAME managed to convince its syndicate of lenders, led by Royal Bank of Scotland, to relax its debt covenant. But sources "close to the State-owned bank" told The Express it was running out of patience.
"The immediate response from RBS will be to push for more store closures, but the tipping point for the directors and the lending banks will come when the stores don't have products to sell," said an "industry source".
"This could happen if more suppliers follow suit."
Another source added: "RBS will be looking for the best way to secure its position or improve it. Suppliers pulling their products is a stepping stone to administration, but the problem for RBS pulling the plug is that it will be an expensive and complex administration because Game has 1274 stores across Europe and Australia.
"Lending banks will only want to consider a pre-pack administration, where there is a pre-arranged buyer, but who would want to buy GAME?"
RBS declined to comment on the report.
GAME Group was last week forced to issue a note to shareholders in an attempt to calm concern over its ability to stock new games.
Its current stock issue with EA is "temporary", and both parties are working to make sure it doesn't happen again, GAME said.
GAME added: "As part of the strategic plan development process which it announced on February 3, the Group has been working closely with its suppliers, as well as other stakeholders. In particular, the Group has been discussing with its suppliers the level of support and engagement it needs from them over the coming months. There have, during that process, been isolated instances where it has not been possible to agree launch plans for individual game titles."
US retail giant GameStop is thought to be poised to make a bid for GAME, particularly its UK and Spanish business.