Competitor’s gambit brings Chapter 11 filing for GameTech
Captured in a squeeze from one of its competitors, Reno-based GameTech International last week filed for Chapter 11 bankruptcy protection while it reorganizes.
The filing in federal bankruptcy court in Delaware comes just days after GameTech reported that its lenders U.S. Bank and Bank of the West had sold GameTech’s loan to the Yuri Itkis Gaming Trust of Las Vegas.
The trust controls FortuNet Inc., a Las Vegas company that’s primary competitor to GameTech in its business of electronic bingo games.
GameTech’s $16 million loan with the two banks, which came due June 30, was secured by nearly all of its assets. After Yuri Itkis Gaming Trust bought the note, it demanded immediate repayment.
In a press release, GameTech said it was “left with no alternative” but the Chapter 11 filing after the repayment demand from the trust.
The company said it expects to continue normal operations during the reorganization. GameTech has sold electronic bingo systems installed in 38 states and also operates a video-lottery system in seven states.
“The company believes its business has significant competitive advantages that make it an attractive candidate for investment,” GameTech said in last week’s press release.
The publicly held company reported a loss of $6.4 million on revenues of $30.9 million in its most recent fiscal year, which ended Oct. 30. That continued a string of losses dating from early 2008, and the company said in filings with the Securities and Exchange Commission that it was looking at alternatives ranging from strategic partnerships to asset sales.
“The best transactions are defined by sellers being willing to set their ego aside for the benefit of their customers and employees,” writes Mike Bosma.