Atari officials have announced that they will sell $125 million in common stock and pay Infogrames up to $100 million of the proceeds, as well as issuing additional shares to cover the remainder of their $170 million debt to the parent company. The deal will cut the company’s stake in Atari from 88% to 66%.
This repayment puts Infogrames in a much stronger position to repay the 125 million euros ($141m) in convertible bonds that they are due to pay in 2004 and 222 million euros ($250m) due in 2005. This news has already had a positive effect on the company’s share price, which has been kept low after concerns that it would not be able to repay the bonds in full.
The decision to use the Atari branding for all products has worked well for Infogrames, who have been able to cut net debt by 125 million euros ($141m) to 411.7 million euros ($464m) at end-June.