Game teeters on the brink of insolvency

GAME shares plunged as much as 78 per cent yesterday to just three quarters of a penny after it was unable to assure investors that the value of its shares could be redeemed or grown.

Just weeks after renegotiating its banking covenants, Game said it was “uncertain” whether any of the solutions being discussed with suppliers and lenders will be successful and warned that equity in the firm could be left worthless.

The troubled video games retailer also said it was exploring a range of possibilities including “seeking access to alternative sources of funding” and “reviewing the position of all its assets in the UK and international territories.”

Several major games makers including Electronic Arts, Capcom and Nintendo have refused to supply Game with its new releases, and the group could spiral into administration if it is unable to pay its quarterly rent bill, estimated to be around £85m, which is due in a fortnight.

Analysts believe an administration via a pre-pack deal is the most likely outcome for the business, with Gamestop, the US video gaming giant, swooping into buy parts or all of the business.

Game, which runs 1,270 stores across UK, Europe and Australia, is thought to have hired Deloitte to handle any insolvency process.

Shares, which have lost 95 per cent of their value in the last year, closed down 66 per cent at 1.2p last night.