Herve Caen, Interplay's CEO, announced last night that the company is in the "advanced stages of negotiations" to sell Shiny Entertainment. The prospective buyer and potential terms of sale were not disclosed.
"Although the transaction is not complete and is subject to definitive agreements and satisfaction of various closing conditions, we envision this initiative as a key element in our future growth plans, providing the potential source of funding as Interplay builds on its leadership position in adventure and role-playing games on the PC and next generation consoles," said Caen. "In combination with our recent cost-cutting measures and management reorganization, this transaction would further strengthen our balance sheet going forward. Games upcoming for release in the second quarter will be the first steps in our renewed growth efforts." Interplay's financial situation is very precarious. The company posted a net loss in 2001 of $46.3 million due to rising operating costs as percentage of its revenues, and lower revenues. It released just eight games in 2001, compared to 26 titles in the prior year. In Interplay's 2001 annual statement, which was also released yesterday, the company said that while the sale of Interplay is critical to Interplay's survival, it may not be enough to pull the company from its tailspin: "...There is no assurance that [Interplay] will be able to complete the sale of Shiny, or that the net proceeds from the sale will be sufficient to fund our operations through December 31, 2002. Furthermore, if we are unable to complete the sale of Shiny, we will not have sufficient funds to repay our outstanding liabilities, and no assurances can be given that alternative sources of funding could be obtained on acceptable terms to us, or at all. These conditions, combined with our historical operating losses and our deficits in stockholders' equity and working capital, raise substantial doubt about our ability to continue as a going concern."
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