Atari US Operations File for Bankruptcy

According to a report from the LA Times, the US operations of Atari have been filing for chapter 11 bankruptcy, in the hope of restarting debt-free and separated from the French operations (the ex-Infogrames). From the report:

Its leaders hope to break the American business free from French parent Atari S.A. and in the next few months find a buyer to take the company private. They hope to grow a modest business focused on digital and mobile platforms, according to a knowledgeable person not authorized to discuss the matter privately.

…

There is evidence that the U.S. operation, which after the sale of other assets now makes up the bulk of Atari S.A.’s business, has been improving. The corporate parent has been profitable for the last two fiscal years, save for the effect of a money-losing French subsidiary, Eden Games, that has been up for sale. Before that, neither Atari S.A. nor Infogrames had been profitable for about a decade.

Still, its profits have been small ($11 million and $4 million, respectively, for the last two fiscal years) and revenue plummeted 34% in fiscal 2012 and 43% in fiscal 2011.

But the company’s growth potential has been hampered by its near total reliance on London financial company BlueBay Asset Management for cash. A $28-million credit facility with BlueBay lapsed Dec. 31, leaving Atari without the resources to release games currently in the works, including a real-money gambling title titled “Atari Casino.”

…

Atari Inc. has secured a commitment for $5.25 million dollars in debtor-in-possession financing to continue operations and release games. If Chapter 11 is successfully completed, the U.S. business could reemerge with its own resources and little or no debt to BlueBay.

Thanks, Polygon.