Game collapses into administration, 6,000 jobs in jeopardy

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Game has appointed PwC as administrator to the business this morning after “ceaseless interrogation of every possible alternative” failed to save the troubled entertainment retailer. It is thought that chief executive Ian Shepherd has stepped down.

An announcement on store closures and potential redundancies is expected later today.

In a statement to the Stock Exchange Game said: “Further to our announcements of 21 March, the Board of Game has completed its discussions with lenders and third parties without resolution, and has therefore today appointed PWC to act as administrators for the Group.

“This decision is taken after careful consideration and ceaseless interrogation of every possible alternative.

“The Board would like to thank the teams of Game and Gamestation colleagues around the world for their exemplary dedication, passion and professionalism.”

Game’s 6,000 jobs have been put on the line.

Mike Jervis, joint administrator and partner at PwC, said: “The group has faced serious cashflow and profit issues over the recent past. It also has suffered from high fixed costs, an ambitious international roll-out and fluctuating working capital requirements.

“Despite these challenges, we believe that there is room for a specialist game retailer in the territories in which it operates, including its biggest one, the UK. As a result we are hopeful that a going concern sale of the business is achievable.”

Game’s banks, led by state-backed RBS, are thought to be working on a deal to buy a slimmed down Game out of administration to claw back its money. The games specialist filed a notice of intent to appoint an administrator on Wednesday, after suspending its shares.

Sources close to Game had previously blasted the banks for walking away from a potentially life saving deal, tabled by Comet Owner OpCapita. It is thought the firm is unlikely to table another bid, but has not ruled it out.

US rival GameStop is also in discussions with PwC, as well as Hilco. Retail-Week.com revealed on Thursday that PwC had received “5 or 6” serious expressions of interest in Game’s UK arm , which has 600 shops, according to sources close to the situation.

The 1,300-store retailer owes nearly £100m to the banks, with RBS owed about £40m.