Infogrames shares climb as debt-busting plan is revealed
French game publisher Infogrames has seen its shares climb significantly on the news that it will slash its debts by $115 million as part of a plan based on the sale of 27 million shares in US subsidiary Atari Inc.
French game publisher Infogrames has seen its shares climb significantly on the news that it will slash its debts by $115 million as part of a plan based on the sale of 27 million shares in US subsidiary Atari Inc.
It was reported earlier this month that Atari plans to raise some $35 million through the sale of its own shares; further details of this share offering now reveal that European parent company Infogrames will also be offering $115 million worth of Atari shares.
The sale is part of a deal which will see Atari paying back the $170 million which it owes Infogrames by issuing 39 million common shares to the company. After the offering, Infogrames will own just over 70 per cent of Atari Inc - down from its current holding of 88 per cent.
Infogrames needs to repay â'¬125 million of convertible bonds in 2004, with â'¬222 million due in 2005, a situation which this deal will make far more palatable for the company. Concern over the company's ability to meet these commitments has depressed Infogrames' share price for some time.
The Atari share deal will cover Infogrames' 2004 commitments comfortably, and will bring the company's ratio of net debt to equity into more manageable realms. Shares in Infogrames (IFOE.PA), which rebranded its consumer-facing operations with the Atari name earlier this year, rose by almost six per cent on Friday following the news, although they have fallen back slightly today.
Reuters