Struggling game publisher Atari, a subsidiary of the French headquartered Infogrames, has announced a new $15 million credit line and plans for a one-for-ten reverse stock split ahead of its imminent financial results, as it fights NASDAQ delisting.
The company's new three-year secured revolving credit facility with Guggenheim Corporate Funding, which provides up to $15 million of credit availability, will help the company continue its major restructuring which has seen the divestiture of its external studios,
most recently Shiny to Foundation 9 and
last week's sale of Melbourne House to Krome.
According to a statement, Atari "...expects that the Guggenheim credit facility will provide funding for its current and reasonably foreseeable capital requirements as it relates to working capital needs in the ordinary course of business."
The company explains of the thinking behind its reverse stock split: "Currently, the price of Atari common stock is approximately $0.50 per share. The proposed stock split would reduce the outstanding shares to one-tenth their current number, and by doing so, should result in a per share market price well above the $1.00 per share Nasdaq minimum bid price requirement." The move will require stockholder approval.
Atari's chairman (and Infogrames founder) Bruno Bonnell comented of this move: "While Atari has not been assured that the reverse stock split will ensure reversal of that staff determination, even if the determination were not reversed and trading was moved to the Nasdaq Capital Market, continued eligibility for trading in that market would require that the market price of Atari's common stock be above $1.00 per share."
The next major milestone for Atari is its earnings for the latest financial quarter, which will be released after market close on Thursday. It will likely be accompanied by further statements on the company's ongoing plans to refocus and escape debt and funding issues plaguing both it and its parent company Infogrames.
