Atari preps new share issue as full-year projections are upgraded

Publisher Atari has filed a statement of its intent to sell nine million shares of common stock in a move aimed at raising $35 million of new capital to clear some of the company's debt.

The registration with the SEC also notes that French parent company Infogrames Entertainment plans to sell 18 million new shares, although Atari Inc will not receive any proceeds from this sale of stock.

The move comes as Atari warned that results for its second quarter (ending in September) will be lower than last years, although the company still expects to be buoyed by strong figures for the other three quarters of the year, leading to full year net income growth of between 100 and 160 per cent.

That would represent net income of between $35 and $45 million, on sales of between $560 and $590 million (a turnover gain of five to ten per cent). The drop in the second quarter is attributed simply to the fact that the majority of the company's game releases are scheduled for the other months of the year.

The markets responded warily to Atari's announcements, however, and the company's share price ended Friday down almost 11 per cent. However, if the stock issue goes to plan, it will provide a major boost to the company's debt servicing efforts - which remain a key factor in Atari's future financial health.