Game Digital agrees new asset-backed loan facility with main shareholder

21st Apr 2016 11:43

(ShareCast News) - Game Digital has agreed a new £100m asset-backed revolving loan facility with its hedge fund main shareholder Elliott Advisers.Elliott, which bought Spanish and UK assets of Game in 2012, will provide the financing via its Lajedosa Investments vehicle.The agreement, which will first need to be approved by at a general meeting, comes a few weeks after interim results from the retailer included a slashed dividend but otherwise exceeded recently reduced forecasts.Game said an asset-backed loan, which will replace its £30m revolving credit facility from HSBC and Barclays, would "better suit the needs of the business" and has a "less restrictive" financial covenant structure than the current facility.The FTSE Small Cap company said the new facility was a better fit as the quantity of stock it seeks to purchase varies season by season and can expand significantly around the release of new games and consoles."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."While the new facility does not include any financial covenants, Game said it does include restrictions in relation to mergers, acquisitions, investments, disposals, new business activities and the entry into certain forms of financing arrangement, all of which are subject to certain exceptions.As part of the facility agreement, Lajedosa, Game and its subsidiaries will also enter into a debenture as security for the amounts due under the facility agreement.Further details of the financing documents and a notice convening the general meeting to approve the facility will be sent to shareholders in due course.Shares in Game were down 1% to 122.14p not long after noon on Thursday.