UK-based video games retailer Game Digital has agreed for an asset-backed revolving loan facility of up to £100m, enabling it to put its struggling business on track.
Game Digital and some of its group companies, including Game Retail, Game Digital Holdings, Game Digital Solutions, entered into the facility arrangement with Lajedosa Investments, which is associated with Duodi Investments.
An investment vehicle that is owned by Elliott International and Elliott Associates, Duodi Investment is the retailer’s major shareholder.
The retailer had been looking for an asset-backed funding arrangement that could replace its current revolving loan facilities.
In a statement, the company was quoted by Insidermedia.com as stating: "The quantity of stock that the business seeks to purchase varies seasonally and can rise significantly around the dates of new hardware and software releases."
"Consequently, the group has a preference for an asset-backed loan facility as it affords greater flexibility than the existing revolving credit facilities, allowing the group to increase or decrease its stock purchasing capacity through higher or lower funding, as required.
"An asset-backed lending arrangement also provides a less restrictive financial covenant structure compared with the group’s existing revolving credit facilities, which is also more suited to the group’s seasonal fluctuations in trading activity."
The lending arrangement needs approval of the shareholders.
The new funding package will replace the retailer’s existing £30m revolving loan arrangement with Barclays Bank and HSBC Bank.