Atari filing addresses default of "financial covenants"

[UPDATE] SEC docs update shareholders, clarifies status of loan agreement with HSBC Bank.

Long-struggling game publisher Atari, Inc., the US publishing arm of the once significant Lyon, France-based publisher Infogrames, alerted the Securities and Exchange Commission this week that on January 18, the publisher had been notified by HSBC Bank USA that it was "in default of certain financial covenants for the quarter ending December 31, 2005."

The statement downplayed the significance of the default, saying the balance was a "nominal amount of letters of credit that have been cash-collateralized."

Contrary to previous coverage, the company is not in default of any loan, per se, but rather failed to meet certain financial benchmarks required of the publisher by HSBC.

Atari has been a fountain of bad news over the past year--it lost CEO Jim Caparro in June, 2005, after only seven months on the job; the same month, the company announced it was putting its Humongous Entertainment game studio on the block. It later sold the studio to parent Infogrames for $10 million. And Bonnell remains the company's CEO, a position he assumed after Caparro's departure.

On a positive note, the publisher has two high-profile games due in the first half of 2006: Marc Ecko's Getting Up: Contents Under Pressure is due in February, as is the online role-playing game Dungeons & Dragons Online: Stormreach.

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Discussion

21 comments
Noijo
Noijo

Being an Old School gamer, I found this news disheartening. I am one of those pulling for Atari to return to prominence after so many years being knocked down after the Atari hardware couldn't keep up with the Nintendo Entertainment System (NES). Then seeing Sega coming in to the market with their Genesis system only to see Atari fade away. I hope this is just a minor thing that will not hurt the long outlook for the company, they've gotten their hands on some really good games to publish too! While this might bankrupt the Atari side of the company, it will not leave us without the name Atari being available to be used as a company name. I mean didn't Atari already go bankrupt before Hasbro bought them, then sold them to Infogrames. Dungeons & Dragons Online will not save the company, heck it might even hurt them more. This game is not going to be a very huge success since it is modeled a lot like Guild Wars but will require a monthly fee to play the game. I am not sure what the amount was to make Dungeons & Dragons, but the publisher I would think would only see money from the box sales and not the monthly fees which are used to keep a development team, pay for bandwidth deal with a backbone server. I heard that World of Warcraft had a budget of $30 Million, which lends reason to why this game was so void of content. EverQuest had a $20 million budget I believe and it was built 3 years before World of Warcraft was started. Not gotten any figures on EverQuest II, but I know it would have to be a bit more with the voice actors and use of other Sony Pictures technology.

windowlicker22
windowlicker22

quote: For a while there, people were wearing "Retro" T-shirts with the old-school Atari logo, thinking they were all cool and retro! If only they knew the Atari *name* was purchased by a French company and has been responsible for such contemporary gems as Driver 3.................................................. Uhm...ever thought about the fact that the Atari st was one of the first decent computers to run a software sequencer...in the oldskool world atari is still looked upon as a revolutionary piece of hardware when assoiciated with making music. Maybe the guys were musicians

GameonDerek
GameonDerek

Hey runstalker, so are we not allowed to talk about Atari anymore? Because obviously if we do talk about Atari, according to you, we MUST be talking about present-day Atari. So if I am a 25 year old wearing an Atari t-shirt because I grew up playing it and loved every minute of it, I should be embarassed because of what is going on with the brand name today?

weedr
weedr

"i miss the Infogrames armadillo. (Of course, how a French company adopted an armadillo as it's "mascot" was always a mystery to me.)" almost as much mystery as having an italian plumber as the mascot of a certain japanese company?

runstalker
runstalker

^- Witness, above. Another who views current day Atari as the same company as classic video game era Atari. It's Infogrames people! The french company that is frequently more ambitious than it can deliver! The Atari name, its original owners buried in debt, was purchased and yanked from all previous ties, essentially replacing 'Infogrames' as the mantle name for the publisher. THIS ATARI didn't 'bring the damn table itself'. That said, this new age Atari is not hopeless. Some bright spots in the catalogue. And they're brave enough to support hard-to-market gems like Indigo Prophecy, so props are due. But hey, you know this 'aint your dad's Atari. It's not even your older brother's Atari.

stovich
stovich

In my eyes, Atari didn't bring any "cards to the table". Atari brought the damn table itself. Hope they un-slump themselves.

killa-k
killa-k

oh boy when will Atari learn?

NeoJedi
NeoJedi

Getting Up is looking to be a good game, let's hope it is, for Atari's sake.

runstalker
runstalker

Dear daqua_99: Read the 5 comments following mine and you'll understand. People (gamers even) think that this Atari is THE Atari from ye olde' classic video game days. That's the observation of irony I'm attempting to convey. Thankfully it's a self-fulfilling analysis.

chessasaur
chessasaur

I miss the Infogrames armadillo. (Of course, how a French company adopted an armadillo as it's "mascot" was always a mystery to me.)

ghsacidman
ghsacidman

Who cares if someone wears an Atari shirt??? Atari was one of the first industry leaders and brought many cards to the table that made gaming a more stable market. Because of you runstalker, I'm going to Hot Topic to pick up not 1...... but 2 Atari shirts. And.... I'LL WEAR THEM WITH PRIDE!!!

DarknessOfFate1
DarknessOfFate1

Ataris been around for ever, and made some truly shcoking games. When are they going to admit defeat?

XlpranksterlX
XlpranksterlX

When is this windeling string Atari has been on for years going to end?

daqua_99
daqua_99

Runstalker, we knew that Atari was not the orriginal. Or at least anyone who reads Australian gaming magazines!

runstalker
runstalker

You know what makes me laugh? For a while there, people were wearing "Retro" T-shirts with the old-school Atari logo, thinking they were all cool and retro! If only they knew the Atari *name* was purchased by a French company and has been responsible for such contemporary gems as Driver 3. But these dudes with the T-shirts think they're all old school! They have no clue that Infogrames resurrected the name for North American marketing familiarity and property purposes. "Check out my Atari T-shirt, I'm so retro-hip! Forget these new games dude, Atari was the place to be!"

delahaya
delahaya

D&D Online is not that great in my opinion. It just feels "clunky" somehow. That said, it will probably be a success financially.

LordOfMidnight
LordOfMidnight

It's still hard for me to believe the Atari name is still active. Brings back a lot of days with my 2600 and that landfill of "E.T." cardtridges... but I digress.

ElBanano216
ElBanano216

havent they learned from 1986 when they made the game market crash?