ATARI : Atari SA announces new shareholders to replace BlueBay Funds
Atari SA announces new shareholders to replace BlueBay Funds
Company supports the proposed acquisition of the BlueBay Funds' interests in
the Atari group by a long-time videogame professional and a fund advised by
Alden Global Capital
This transaction results in changes of directors and in the management
On the basis of extensions of maturity and new facilities, Atari SA and Atari
Europe SAS, which remain in a difficult position, have decided to withdraw
their requests for the opening of a safeguard in France.
Paris - February 5, 2013.
Atari SA (the "Company") has been informed by its main shareholder and sole
lender, The BlueBay Value Recovery (Master) Fund Limited, and The BlueBay
Multi-Strategy (Master) Fund Limited, which together hold c. 29% of the shares
and voting rights in the Company on a non-diluted basis and c. 63% on a fully
diluted basis (together "BlueBay"), that BlueBay has agreed to enter into a
binding agreement for the acquisition of all of BlueBay's interests in the
Atari group presented by Ker Ventures, LLC ("Ker Ventures"), a holding company
ultimately controlled by Mr. Frédéric Chesnais, a long-time videogame
professional and former CEO of Atari Interactive, Inc., and Alden Global
Capital on behalf of Alden Global Value Recovery Master Fund, L.P. (such
investment fund, the "Alden Fund") (the "Offer").
With the filing for Chapter 11 of its US operations on January 21, 2013, and
the filing for bankruptcy (liquidation judiciaire avec poursuite d'activité)
of Eden Games SARL, its French subsidiary, on January 29, 2013, the Company
sees an opportunity to protect its business and it welcomes the Offer.
Ker Ventures, or any affiliates, will acquire from BlueBay 7,451,122 ordinary
Atari shares and 291,600 New ORANEs 2009 (giving access to 5,528,736 ordinary
Atari shares). At closing, Ker Ventures will hold 7,451,122 ordinary Atari
shares representing 25.23% of Atari's share capital and voting rights on a
non-diluted basis, and potentially, with the New ORANEs 2009, 18.96% on a
fully diluted basis.
The aggregate consideration to be paid by Ker Ventures for such securities is
Ker Ventures also agreed, following completion of the transaction, to postpone
the payment of any interest payable under the 291,600 New ORANEs 2009 to be
purchased from BlueBay until the earlier of September 30, 2013 and a period
expiring thirty (30) days after the expiry of the US Proceeding.
Given the urgency of the situation, Ker Ventures agreed to grant a EUR 250,000
short term cash financing to Atari SA, without waiting for the completion of
b.The Alden Fund
The Alden Fund will acquire:
(i) the Senior Loan of c. EUR21 million and the related security
package, pursuant to a transfer of the credit facility agreement entered into
between The BlueBay Value Recovery (Master) Fund Limited, Atari Europe SAS and
the Company (the "Credit Facility"). To financially express Ker Ventures'
commitment to the recovery of the Atari Group, Ker Ventures also committed to
provide a minority investment for the purchase of the Credit Facility and the
related security package, in exchange for a minority beneficial interest in
such Credit Facility.
(ii) the remaining mandatory convertible debt instruments held by BlueBay,
being 342,095 ORANEs 2009 (giving access to 10,019,963 ordinary Atari shares),
152,636 ORANEs 2010 (giving access to 4,028,064 shares), and 795,023 New
ORANEs 2009 (giving access to 15,073,636 ordinary Atari shares), as well as a
residual direct equity stake in Atari (the remaining 1,165,176 ordinary Atari
shares held by BlueBay), representing 3.95% of Atari's share capital and
voting rights on a non-diluted basis, and potentially, with the ORANEs 2009,
New ORANEs 2009 and ORANEs 2010, 44.2% on a fully diluted basis.
Prior to the closing of this transaction, in the context of the Chapter 11
proceedings opened in the United States, the Alden Fund has made available to
the Atari group's US subsidiaries (Atari Inc., Atari Interactive Inc.,
California US Holding, Inc. and Humongous, Inc.) a debtor in possession (DIP)
cash financing of USD 5 million in favorable terms given such subsidiaries'
financial situation, which replaced the debtor in possession (DIP) financing
previously made available by another lender to the Atari group's US
subsidiaries as announced on January 21, 2013. The US Bankruptcy court
approved this financing in a signed order dated January 25, 2013. As part of
the debtor in possession (DIP) cash financing, the Alden Fund made an initial
USD 2 million loan to the Atari group's US subsidiaries. The remaining USD
3million will be available to such subsidiaries upon the satisfaction of
additional conditions, including the entry of a final order at a court hearing
to be held on February 14, 2013. Information filed in connection with the US
Chapter 11 proceedings, which notably includes a 13-week budget projection of
the US subsidiaries of the Company, the debtor in possession financing order
and the subsidiaries' Top 30 unsecured creditors, is available on the website
of the US proceedings at the following link: http://bmcgroup.com; Case #
Following completion of the transaction, the Alden Fund has already agreed to
support the Company by extending the maturity of the Credit Facility Agreement
and to forbear from requesting interest payments at this point until July 25,
2013, which is also the maturity date of the DIP financing. It is believed
that, by then, the outcome of the Chapter 11 proceedings will be known. The
Alden Fund also agreed to postpone the payment of any interest payable under
the 342,095 ORANEs 2009, the 795,023 New ORANEs 2009, and the 152,636 ORANEs
2010 until the earlier of September 30, 2013 and a period expiring thirty (30)
days after the expiry of the US Proceeding.
Alden Global Capital, on behalf of the Alden Fund, indicated that it only
intends to act as a financing party in this transaction and does not intend to
participate in the board and/or the management of the Atari group.
Furthermore, Alden Global Capital said that, although it reserves its lender's
rights to act as it best sees fit to protect its investment, it intends to be
supportive of the actions the Company takes to maximize value during the
course of the various proceedings. However, given that neither the Alden Fund
nor Alden Global Capital has any control over the bankruptcy proceeding, there
is no guarantee as to the Company's future prospects.
The execution of the final binding documentation for the purposes of this
transaction shall take place on February 5, 2013, and the closing of the
transfer of the BlueBay's interests is expected to take place within a few
There is no shareholders agreement nor voting undertaking between Ker Ventures
and the Alden Fund, which have declared not to be acting in concert vis-à-vis
Atari and their respective investments described above. Each of Ker Ventures
and the Alden Fund will remain fully free to determine how to vote in the
shareholders meeting of the Company, as well as how and when to dispose of its
interests in the Company.
The completion of the transaction contemplated in the Offer will not trigger
any obligation on Ker Ventures and/or on the Alden Fund to file a mandatory
public offer pursuant to applicable laws and regulations.
Approval by the Atari Board and change of directors
The Board of the Company met on Friday February 1, 2013 to review these
developments, and approve these proposals and this course of action (during
which The BlueBay Value Recovery (Master) Fund Limited, being a director of
the Company, was excused from participating in such deliberations and approval
in accordance with the Board's procedures for the management of conflicts of
interest). It took note of the terms and conditions of the Offer and of Ker
Ventures' intention to provide its expertise to support the development of the
Atari group. Accordingly, the Board approved and welcomed the proposed
acquisition of BlueBay's interests in Atari by Ker Ventures and the Alden
Fund, as well as the favorable DIP financing made available by the Alden Fund
in the US bankruptcy proceedings.
The Board also took note of the resignation of The BlueBay Value Recovery
(Master) Fund Limited, represented by Mr. Gene Davis, from its position as
director and thanked BlueBay for the support provided to the Company during
BlueBay's period of investment. Mr.Jim Wilson, who was named CEO of Atari SA
following BlueBay's announcement of its intention to sell its shares in 2010,
has presented his resignation as CEO and director of Atari SA. Mr. Wilson will
continue in his role as CEO of Atari, Inc., a position that he has also held
since 2008, in order to focus his activity on the Chapter 11 proceedings in
the US and running the day-to-day business. The Board thanks Mr. Wilson for
his role in identifying an investor to replace BlueBay over the last two
years, the transformation of the business to digital and mobile games and
licensing, two years of positive current operating income as at March 31, 2012
and staying at the helm of the Company during the most recent challenging
The Board resolved to appoint by cooptation Mr. Frédéric Chesnais and Mr. Erik
Euvrard (independent member) as new directors of the Company. The Board also
resolved to appoint Mr. Frédéric Chesnais to the position of CEO of Atari SA.
Mr. Frédéric Chesnais has accepted this position for a nominal compensation of
EUR 1,000 monthly payable at the termination of the US bankruptcy procedure.
Upon closing of the transaction which results in Ker Ventures holding 25.23%
of the Company's share capital, the Board has resolved to elect Mr. Chesnais
as Chairman. Following this appointment and the closing of the transaction,
the Board shall be composed Frédéric Chesnais (Chairman and CEO), Frank E.
Dangeard (independent director, Chair of the Audit committee), Erik Euvrard
(independent director), Alexandra Fichelson and Tom Virden (independent
director, Chair of the Nomination and Remuneration Committee).
Course of action going forward
The Board and the management will review the situation of the Atari group in
more detail, assess and seek to obtain the financing needed for ongoing
operations and work closely with the Atari group's US subsidiaries in
reviewing the options available to them under the pending Chapter 11
proceedings. The management will keep the markets regularly informed of the
changes in the Company's situation and of major decisions taken.
Since most of the employees and valuable assets are located in the United
States, the outcome of the US bankruptcy procedure will be of particular
importance to the Company. Management expects to have a better appreciation of
the outcome of this proceeding within the next 6 months and before the
maturity date of the DIP financing on July 25, 2013.
On the basis of the extension of the maturity of the Credit Facility, and the
waiver of any events of default resulting from the opening of the US Chapter
11 proceedings, Atari SA and Atari Europe SAS have decided to withdraw their
requests for the opening of a safeguard in France.
Given the short timing of these events, in light of the limited resources
available, the Company was unable to continue to support its French
subsidiary, Eden Games SARL. The Board took note that the manager (gérant) of
Eden Games SARL filed for receivership and the Commercial Court of Lyon
initiated a bankruptcy on January 29, 2013 (liquidation judiciaire avec
poursuite d'activité). In France, Atari SA has now 4 employees and Eden Games,
Despite these developments, the Company remains in a difficult position. No
assurances can be made at this point regarding any potential recoveries to the
"Despite the entry of new shareholders and financial support, the Company
finds itself in a delicate and complex situation. But when I heard about the
news, I did not hesitate a second." indicated Frédéric Chesnais. "I made this
move because I love the team, I know about games, I love the brand and in the
past we have all spent nights and days to make it shine. We will work as hard
as we can to review each option available and seek to obtain, going forward,
the financing needed for Atari S.A. and for the Atari Group in the current
circumstances. I am just given a few weeks to put the Company back on track
and I have to give it a try".
The Company intends to resume the flotation of all Company's listed securities
after the publication of its revenues for the quarter ended December 31, 2012
and after the first hearings of the US proceedings, which will be decisive for
the perspective of the group, in order to previously provide the shareholders
with the most accurate information. The resumption of the flotation may take
place within a 4 to 6-week period, with a 48-hour prior announcement.
About Ker Ventures and Frédéric Chesnais
Ker Ventures is an affiliate of Ker Ventures, LLC, a limited liability company
organized under the laws of the State of Delaware, ultimately controlled by
Frédéric Chesnais. Frédéric Chesnais has a very long background in the
videogame industry. He was the Chief Executive Officer of Atari Interactive,
as well as the Chief Financial Officer and Deputy-Operating Officer for the
Atari Group. In that capacity, he has participated in the creation and launch
of many games.
The strategy of Ker Ventures, his personal holding, is to facilitate the
creation and promotion of any form of interactive entertainment.Through Ker
Ventures, Frédéric Chesnais has been the primary investor and executive
producer of many entertainment projects.
About Atari, SA
Atari (www.atari.com) is a multi-platform, global interactive entertainment
and licensing company. The original innovator of video gaming, founded in
1972, Atari owns and/or manages a portfolio of more than 200 games and
franchises, including world renowned brands like Asteroids®, Centipede®,
Missile Command®, Pong®, Test Drive®, Backyard Sports® and RollerCoaster
Tycoon®. Atari capitalizes on these powerful properties by delivering
compelling games online (i.e. browser, Facebook® and digital download), on
smartphones and tablets and other connected devices. The Company also develops
and distributes interactive entertainment for video game consoles from
Microsoft, Nintendo and Sony. As a licensor, Atari extends its brand and
franchises into other media, merchandising and publishing categories. For more
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Atari SA announces new shareholders to replace BlueBay Funds
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