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Irvine's Interplay Posts Loss, Takes Steps to Reduce Debt

Restructuring: Firm sells stock, finds new financing.

April 17, 2001|From Dow Jones Newswires

Interplay Entertainment Corp., an Irvine maker of entertainment software, reported a $5.3-million quarterly loss Monday, but also announced new financing that should reduce its interest expense by about $1.5 million a year.

The company said in a news release that it has raised about $12.7 million in cash by selling stock to a private investor group, which paid $1.5625 a share for it.

The investor group was led by Special Situations Fund with Fidelity Management & Research Co. on behalf of funds managed by it.

Interplay also issued warrants to investors to buy stock later at $1.75 a share. Half of the warrants can be exercised immediately, the other half under circumstances based on the future trading price of the company's stock.

Interplay also said it received a $15-million, three-year working capital line of credit from LaSalle Business Credit Inc. The line is subject to review and renewal every April 30 and is secured by nearly all of the company's assets, plus a $2-million personal guarantee from the company's chairman and chief executive.

The proceeds from both the offering and the line of credit were used to reduce debt, replace the company's existing line of credit and provide capital for future operations.

The financing reduced the company's debt to its lowest point in several years, Brian Fargo, Interplay's chairman, said in the release. It also improves the company's financial stability, he said, and should help it take advantage of any upswing in the market later this year.

The company's loss for the fourth quarter, 18 cents a share, was an improvement over the loss of $9.6 million, or 35 cents, for previous year's final three months.

Quarterly revenue increased 13% to $30.8 million from $27.3 million.

For the year, Interplay lost $13.5 million, or 45 cents a share, compared with a net loss of $41.7 million, or $1.86 a share, for the prior year. Annual revenue rose 3% to $104.6 million.

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