Atari Flunks Bank Test
Get ready for yet another dismal earnings report from Atari (ATAR).
In a regulatory document filed on Tuesday, the video-game software publisher warned that results for the period ended Dec. 31 of last year didn't meet the strictures placed on the company by its lender, HSBC.
On the positive side, the fact that Atari has breached the agreement may have little immediate effect. According to the regulatory filing, Atari had essentially borrowed only a "nominal amount" of money from the credit line from HSBC.
But the negative could outweigh the positive. This marks the second time in three quarters the company's results have failed to meet the financial targets set by HSBC, even though HSBC reduced those targets after the previous time Atari fell short of them.With Atari's cash reserves having dwindled to just $2.5 million at the end of September, access to the credit line from HSBC has previously been -- and could again prove to be -- crucial to the company's ability to continue as a going concern. Company representatives did not return calls seeking comment. Although HSBC notified Atari that it was in default of the lending agreement -- a $50 million line of credit -- Atari didn't say what actions the bank by take in response. In its latest incarnation as a subsidiary of the France-based Infogrames, Atari has been struggling for years. In just the last year, the company's CEO left after just seven months on the job, it shut down or sold off three software development studios and saw sales and bottom-line results fall off dramatically. In after-hours exchanges, Atari's stock was off a penny to 90 cents. The company's shares closed regular trading up a penny to 91 cents.
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