Infogrames raises $28 million from Atari share deal

French publisher Infogrames has announced details of a new financing deal which will see the firm receiving $28.2 million in return for 10.6 million shares in subsidiary Atari Inc, which will effectively serve as collateral for the funds.

Under the terms of the transaction, which is being conducted by Infogrames' wholly-owned California US Holdings (CUSH) subsidiary, the publisher will redeem the loan after one year and will be handed back its shares in exchange - or alternatively, it can receive (if positive) or pay (if negative) the difference in the share price over the coming twelve months.

The 10.6 million Atari shares involved in the transaction represent about nine per cent of the company's issued share capital, and the deal will reduce Infogrames' majority holding in the publisher from 67 per cent to 58 per cent.

Industry watchers are observing Atari's performance closely at the moment, as the company prepares to launch its biggest title of the year, Reflections' Driv3r, at the end of the week. Much speculation has surrounded the importance of the title to Atari's financial performance, with some commentators going so far as to suggest that the firm could go bust if it fails to find a hit with Driv3r; while this seems unlikely, it certainly seems probable that the company would face significant financial difficulties if the title underperforms.

Early indicators for the title have not been promising, with extremely mixed critical reaction to preview and review code; however, public anticipation is quite strong for the game, and several retailers in the UK are reported to have broken the street date and begun selling the game already.

If all of this feels familiar, it's because Atari found itself in broadly the same situation this time last year, when Shiny's Enter The Matrix - also apparently a title which Atari could not afford to fail with - rolled out to critical derision but strong public anticipation. Enter The Matrix went on to sell around four million units worldwide; it remains to be seen whether Driv3r, lacking the backing of a major movie franchise with the saturation marketing which that entailed, can repeat that success.