British computer games company Rage Software yesterday said it faces a funding crisis as it admitted that sales have been below expectations and it will make a greater loss this year than analysts have been predicting.
The news pushed shares in the Liverpool company to a record low. Rage, which produces computer games starring footballer David Beckham, was worth more than £300m at the height of the internet boom. Last night, with the company valued at £15m, managing director Paul Finnegan admitted it might be game over. "I think we are vulnerable to a takeover at this price, particularly as people in the industry know the quality of the product coming through."
Rage is locked in talks with its financial advisers and US bank GEM Global Yield Fund, which rescued the company from its last cash crisis, in June, by putting up a £15m credit facility.
Under the terms of that facility, the amount that Rage can use is linked to sales of games and the company's share price. Sales of some of Rage's new titles have been poor and it has so far only been allowed to draw down £4m.
Its GTC Africa driving game for the PlayStation 2 lost out to Sony's World Championship Racing game which was backed by a heavy marketing campaign, while Rage's Denki Blocks puzzle game was a poor performer on the Nintendo Gameboy Advance.
As a result the company said yesterday it has missed sales forecasts. Losses for the year to end June 2002 are expected to be £9m, substantially less than last year's £17m but three times what analysts had forecast.
"We are talking to banks and our brokers about alternative ways of running the business in the short-term," said Mr Finnegan. Rage hopes to be able to tie up a deal within three weeks.
If it cannot the firm faces an embarrassing strategy U-turn, returning to its roots as a game developer working for other people, or possible collapse.
The company, which suffered a string of profit warnings and a management reshuffle last year, yesterday announced a loss for the six months to end December 2001 of £8.5m, up from a loss of £8m.
