GameTech signs sale agreement with the buyer that it fled
GameTech International, which fled from Yuri Itkis to seek protection from in bankruptcy court, may end up in the arms of Itkis after all.
The Reno-based company, which makes electronic bingo gear and video-lottery terminals, said last week it agreed sell its assets to Itkis and companies he controls.
FortuNet Inc., Itkis’ company headquartered in Las Vegas, is the primary competitor to GameTech in the electronic bingo segment.
But the bid by Itkis still might be trumped by another company that makes a better offer in an auction overseen by federal bankruptcy court.
It’s the latest turn in the story of troubled GameTech, which found itself unable to repay $16.4 million it borrowed from U.S. Bank and Bank of the West.
The two banks sold the debt in late June to a trust controlled by Itkis, and he demanded immediate repayment.
He declined a request from GameTech to work a repayment plan. Facing the loss of its assets most of which were secured by the loan GameTech filed a petition for protection under Chapter 11 of the federal bankruptcy code.
At the time of its filing, GameTech executives acknowledged that the company faced what they called “some operational challenges.” But they said its installed base of bingo systems in 38 states and its installations of video-lottery terminals in seven states created a base to rebuild the company.
They said better marketing and technical innovation were keys to improving GameTech’s market share.
In the deal that GameTech reached with Itkis on August 10, Itkis would assume GameTech’s debt and pay up to $2.5 million in cash. (The cash payment would be reduced by the amount that GameTech borrowed under debtor-in-possession financing after it filed for Chapter 11 protection.) If another bidder arrives on the scene, Itkis can boost his offer.
The offer from Itkis and the auction to gather other potential bids still require the approval of a federal bankruptcy court in Delaware.
The company, which is publicly held, 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 that date from early 2008.
The company’s stock, which was near $8 a share before the start of the recession, was trading at 15 cents a share last week. It’s traded as high as 29 cents in the last 52 weeks.
Kristina Miranda, who was hired recently as a staff accountant at Clausen & Company, is currently enrolled at the University of Nevada, Reno and is earning a Bachelor of Science in business administration.