A collective “Noooo…” was cried across our office this morning as news of the latest struggling firm came in. This time it’s gaming legends Atari, as the company has filed for bankruptcy protection today.
This follows on from retail chains HMV, Blockbuster and Jessops, who have all fallen down in the past 2 weeks by entering into administration, and there was also games developer THQ facing bankruptcy at of the end of 2012.
Things really are looking tough out there, however Atari is not down yet as bankruptcy protection only means that whilst the company is down it is certainly far from over. What Atari is actually doing is looking to separate from its not-so-profitable French owners and pitch for independent funding.
What the company will be doing is securing some funding so that it will be able to sell off some of its major assets such as Pong, Asteroid and Tempest and even its now iconic logo. This will give the company 90 to 120 days to sell off the assets and save the company from bankruptcy.
Atari has been through somewhat of a change in the last few years as the company has shifted away from retail gaming and has converted to a digital titles and licensing focused company with games for mobile platforms and downloads proving to be lucrative.
Hopefully Atari will sell off some of the company’s legacy in order to move forward and become profitable in the new download era.
[spoiler]
Iconic Brand Seeks to Restructure and Secure Independent Capital for Future
Growth
Today Atari Inc., Atari Interactive Inc., Humongous, Inc. and California US Holdings, Inc. (collectively, the “Companies”) filed petitions for relief under chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York. With this move, the U.S.-based Atari operations seek to
separate from the structural financial encumbrances of their French parent
holding company, Atari S.A. (formerly Infogrames S.A.) and secure independent
capital for future growth, primarily in the areas of digital and mobile games.
Within the next 90-120 days, the Companies expect to effectuate a sale of all,
or substantially all, of their assets in a “sale free and clear” under section
363 of the Bankruptcy Code or to confirm plans of reorganization that accomplish
substantially the same result. These assets include not only one of the most
widely recognized brand logos, which is familiar to 90% of Americans, according
to a recent survey, but also legendary game titles including Pong, Asteroids,
Centipede, Missile Command, Battlezone and Tempest. Other recognized brands
include Test Drive, Backyard Sportsand Humongous.
Under current management, Atari Inc. has shifted its business from traditional
retail games to digital games and licensing with an increased focus on
developing mobile games based on some of Atari’s most iconic and enduring
franchises. With these moves, the company has added new revenue models,
including digital download and advertising. As a result, Atari Inc. has become a
growth engine for Atari S.A., which in turn has reported consecutive annual
profits in 2011 and 2012.
The company has recently launched a slew of chart-topping titles for iOS and
Android mobile platforms, including Atari Greatest Hits, Outlaw, Breakout and
Asteroids Gunner. The company has previously announced upcoming mobile and
tablet games based upon the popular Rollercoaster Tycoon franchise and Atari
Casino.
The Chapter 11 process constitutes the most strategic option for Atari’s U.S.
operations, as they look to preserve their inherent value and unlock revenue
potential unrealized while under the control of Atari S.A. During this period,
the company expects to conduct its normal business operations.
The U.S. companies are also seeking approval to obtain $5.25 million in
debtor-in-possession financing from one or more funds managed by Tenor Capital
Management, a firm specializing in convertible arbitrage and special situations.
Each unit has filed a number of traditional “first-day” pleadings, which are
intended to minimize any disruption of their day-to-day operations.
[/spoiler]