Atari US restructures relationship with Infogrames

Atari Inc. has announced the completion of several restructuring initiatives transitioning the company out of the videogame production business in the US.

The company has entered into an amendment to its senior secured credit facility with BlueBay High Yield Investments (Luxembourg) S.A.R.L. that will increase its borrowing capacity from USD 10 million to USD 14 million, enabling it to meet its holiday season financing needs.

As a condition to the increase in the availability under the credit facility, Atari Inc. terminated its existing distribution agreements with Infogrames and has entered into a new distribution agreement covering the distribution of Infogrames' products in North America.

In consideration for its services, Atari Inc. will retain 30 per cent of the net receipts from the distribution of Infogrames' products. The parties will enter into a similar agreement for the distribution by Infogrames of Atari's products outside of North America.

Additionally, Atari Inc. has licensed back to Infogrames the use of the "Atari" trademark in North America for the purposes of a global online initiative to be lead by Infogrames.

Further, Atari Inc. has terminated its existing corporate management and service contracts with Infogrames. The company will continue to provide certain administrative functions to Infogrames on a transitional basis over approximately the next 7 to 10 months for an annualized fee of approximately USD 2.6 million.

The parties terminated the agreement under which Infogrames provided certain management services to Atari Inc., which is expected to save Atari approximately USD 3.0 million. The company has also agreed to transfer certain employees, with their acceptance, from the production and development businesses of Atari Inc. to Infogrames.

Atari Inc. previously announced a reduction in its workforce as its CEO resigned and the company decided to exit the production business. Atari UK was not affected by the turmoil.

The company also announced that it has resolved a licensing dispute over the Dragon Ball Z franchise.