The financial troubles at game publisher and would-be virtual reality (VR) pioneer Starbreeze appear to be worse than initially thought, with the company's shares being put under observation status and the company ousting its chief executive.
That Starbreeze has been suffering from financial troubles is not news: Late last month the company announced cost-cutting measures and a refocusing on its core properties following poor commercial response for its latest title, Overkill's The Walking Dead, and a delayed payment of $10 million owed by 505 Games in exchange for the game's console publishing rights. Just over a year ago the company also backed away from its StarVR joint venture, leaving partner Acer on the hook for the project's remaining funding.
Things appear to be worse than first reported, however. The company's shares on the NASDAQ stock exchange have been placed under observation status, a warning to investors and a precursor to a potential delisting, owing to a shortage of liquidity - in other words, spendable cash - at the company. At the same time Starbreeze issued a press release announcing that the board of directors has ousted existing chief executive Bo Andersson with immediate effect, replacing him in the role with deputy chief Mikael Nermark.
'In this phase, Starbreeze needs a different kind of leadership and we have therefore decided to ask Mikael Nermark to take on the full responsibility with our full mandate for this new phase,' claims Starbreeze chair Michael Hjorth of the move. 'Nermark will take over management of operations and lead the work to focus the company. Mikael is a strong leader internally and I have the outmost [sic] confidence in him. During his tenure as CEO in previous years, he implemented a comprehensive restructuring and repositioned the company from work for hire to game development based on proprietary IP.'
As well as leaving the role of chief executive, Andersson has resigned from the board of directors alongside Kristofer Arwin. Without them, the company will run a judicial reconstruction under the Stockholm District Court. Under this, the company dodges some of its outstanding debts: While Starbreeze claims it will continue to pay salaries and continues its operations as usual, it is refusing to pay for goods or services relating to the period prior to the filing for reconstruction - in other words, it's legally welching on its existing debts to suppliers, but will pay for any more goods or services it requires from today onwards.
The reconstruction affects both Starbreeze AB, the parent company, and subsidiaries Starbreeze LA Inc., Starbreeze USA Inc., Starbreeze Paris, Starbreeze Barcelona, Starbreeze IP LUX, Starbreeze IP LUX II SarL, Dhruva Infotech Ltd., Nozon, and Parallaxter, the company has confirmed. Should the reconstruction not give the company enough time to find a long-term financial solution, then insolvency beckons.
February 17 2020 | 09:00