RBS To Push For More Store Closures
Beleagured high street retailer GAME has taken another knock today thanks to a damning insider report that claims directors may be considering 'pulling the plug' on the operation rather than incurring more losses. After some sensational stock shortages (culminating with Mass Effect 3), GAME are apparently in crisis talks with lenders such as the Royal Bank Of Scotland - who will probably advise the company to facilitate "more store closures" in the near future. It's a worrying story, and we've got the full quotes below.
The Daily Express reports that GAME upper management may opt to "shut up shop rather than rack up more losses" in the face of gloomy projections for the next trading season, citing a number of anonymous insider sources.
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.
Another source claims that chief lender RBS will urge GAME to close more stores in order to cut overheads, and sadly, this will probably be inescapable regardless of the ultimate outcome. What's more, if GAME does go into administration, the resulting fallout is likely to be incredibly messy and difficult for other buyers to pick up the pieces.
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.
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?
Who indeed? Gamestop is rumoured to be interested, but with such a diverse portfolio of stores, a deal would be incredibly tricky to hammer out.
Again, it's worth noting that this is another unconfirmed report - and GAME's financial situation may not be as bad as the doomsayers claim. But there's no smoke without fire, and every chance that we'll at least be in for more redundancies in the near future. We'll continue to report as the situation develops.