Over 2,000 Jobs Cut As Game Group Collapses

Some 2,119 Game Group employees will be made redundant at the end of the week after the struggling retailer collapsed, according to Sky sources.

The appointed administrators PwC said 277 of the company's 609 UK stores will be shut with immediate effect.

They added the job losses would include 2,104 store staff and 15 head office employees.

Meanwhile, a consortium led by state-backed Royal Bank of Scotland (LSE: RBS.L - news) (RBS) is considering a takeover of Game Group, which has gone into administration.

The seven banks are owed £85m by the video games retailer, with an additional £95m due to suppliers.

Game's lenders and administrators expect the company to be sold to a third party, but that RBS will insist on full repayment of the debts owed to its banks.

Failure to reach such an agreement could see RBS lead a syndicate of lenders to take over the retailer and appoint a team of specialist managers to turn it around.

More than 5,500 jobs abroad are also at risk as Game tries to find a buyer for its its UK and international operations.

Speaking on Jeff Randall Live, Mike Jervis, partner at PwC said: "Game Group had two fundamental problems. First (OTC BB: FSTC.OB - news) of all there was a very ambitious overseas expansion into seven territories in addition to the UK.

"On top of that the UK store portfolio is very extensive ... That footprint and that high fixed cost is very difficult to maintain."

Game faced a £21m rent bill for the upcoming quarter while struggling with its £180m debt.

Shares slid from more than 70p at the start of last year to under 1p, before being suspended on Wednesday when the company admitted there was "no equity value left" in the group.

The US-based games retailer GameStop (NYSE: GME - news) is among those interested in buying Game Group, along with private equity firms Hillco and OpCapita.

OpCapita, which bought Comet for £2 last year, has already had an offer to take over Game turned down.

It is anticipated PwC will honour any wages owed - £12m worth of salaries is due at the end of the month.

Game's demise follows a string of profit warnings, the latest of which prompted suppliers like Nintendo and Electronic Arts (NasdaqGS: ERTS - news) to refuse to provide new stock.

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