On Thursday, the gaming group said that Sweden’s Tomb Raider games group Embracer had raised 2 billion crowns ($182 million) in a share issue directed at institutional investors. It issued 80,000 new shares at a subscription price of 25 crowns per share. The offering was multiple times oversubscribed, it added. “The result will contribute significantly to revising the net debt target,” Embracer said in a statement.
Embracer, backed by the state-owned pension fund PIF and private investment funds, has been spending heavily on games acquisitions. It snapped up Middle Earth Enterprises – the Lord of the Rings franchise holding company – from entertainment giant Square Enix last August, comic book publisher Dark Horse in December, video game developer Anime Limited in October, and several smaller games entities.
Embracer said that the latest funding will be used for restructuring, a program to slash investments and costs and reduce its debt target. The program is divided into different phases until March 2024 and will mainly focus on cost savings, capital allocation, efficiency, and consolidation. It could include staff layoffs, studio closures or divestments, and game project cancellations or suspensions.
Earlier this year, Embracer’s shares fell more than 13% after the company reported lower-than-expected sales for its first quarter. It cited the Saints Row IV reboot, released on June 1, as one of the reasons for the disappointing results. The game has had mixed reviews, with critics citing graphical glitches, a complex character control system, and uninspired plot lines.
“The share issue enables us to strengthen our financial position further and improve the company’s long-term ability to invest in games development,” CEO Lars Wingefors said. “We will continue to pursue our strategy of creating and delivering high-quality titles and attracting players through our strong brand presence while lowering our costs and focusing on the core business.”
Goldman Sachs (Financial Products) Limited (“GS”) is acting as the sole global coordinator and book-runner, and Nordea Bank Abp, filial I Sverige (“Nordea”), is acting as a co-lead manager. Baker & McKenzie Advokatbyra KB and Roschier Advokatbyra LLP act as legal advisers to GS, and Latham & Watkins (London) LLP as legal counsel to Embracer.
This press release contains inside information the issuer is obliged to make public by the provisions of (EU) Regulation 596/2014. This press release is issued by the responsible person named below for publication at the time stated in this release. It is subject to the same restrictions as other information made public by EU regulations.
Investors should conduct independent investigation, analysis, and evaluation of the business and data described in this announcement and publicly available information. The price and value of securities can go down and up, and past performance is not a guide to future performance. The issuance of shares may involve risks for investors. Investors should therefore determine whether or not to acquire, hold or dispose of the shares referred to in this announcement.
