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GAME bosses may "pull the plug" if more suppliers follow EA

"Who would want to buy GAME?" asks Express source

Despite bullish talk last week, GAME Group's directors are strongly considering "pulling the plug" in the wake of a squabble with EA over credit for March releases, including this week's big hit Mass Effect 3.

"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," a source told the Express.

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"They are in discussions with their legal advisers about whether to shut up shop rather than rack up more losses."

New to the story? The short version is that GAME and Gamestation won't stock Mass Effect 3 or any other new EA title throughout March, save for SSX. GAME Group owes hefty sums to a lending syndicate led by the Royal Bank of Scotland, hence its inability to meet credit terms proposed by EA. The retailer struck a deal to relax debt covenants last month, but according to financial insiders, there's only so much goodwill in the tank.

"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," commented another source. "This could happen if more suppliers follow suit. RBS will be looking for the best way to secure its position or improve it.

If GAME hits the deck, the bureaucratic fallout will be protracted and painful. "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 1,274 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?"

We spoke to a number of our own sources last week, pushing them for tips as to GAME's recovery. There were some interesting suggestions - in the long term, returning to its roots as a specialist store with unique events and knowledgeable staff could be GAME's ticket to victory. What do you think?

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