Iconic Video Game Maker Files for Bankruptcy CNN
One of the pioneering companies in the video game business -- the company that created the games “Pong,” “Centipede” and “Asteroids” -- filed for bankruptcy today, CNN reports. The move by Atari U.S. is an effort to break off the U.S. branch from its cash-strapped French parent company, the piece reports.
The company is expected to survive in some form, the report notes.
CNN reports: “In particular, Atari U.S. is looking to ‘secure independent capital for future growth, primarily in the areas of digital and mobile games,’ the company said in a written statement.
“Over the next three to four months, Atari U.S. will seek buyers for some of its assets, including the Atari logo and the company's games catalog. Atari as a whole owns or manages more than 200 games and franchises.”
The company got off to a strong start after its founding in 1972, but later lost ground to Nintendo and other competitors, the piece reports. The company has gone through a number of owners over the years.
“France's Infogrames Entertainment acquired a stake in Atari in 2000, then bought out the company in 2008 and changed its name to Atari S.A.,” CNN reports. “Since then, the rise of casual gaming on PCs and mobile devices has cut into the video game industry as a whole. Atari S.A. has been unprofitable for years, and warned just last month that it will book a ‘significant loss’ for its fiscal year 2013.’
A key problem for Atari S.A. is a debt of $27 million owed to BlueBay Asset Management, which has suspended its credit line. The balance is due March 31, the story notes.
“The company says it is ‘starved for funds’ and hasn't found another principal creditor to take BlueBay's place,” CNN reports. “The New York-based U.S. arm wants to be free of its French baggage. Atari U.S. said it will ‘conduct its normal business operations’ during the bankruptcy proceedings, and it's been approved for $5 million in debtor-in-possession financing from Tenor Capital, a firm that specializes in distressed lending.”